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BRF S.A. Regulatory Filings 2011

May 17, 2011

35591_ffr_2011-05-17_b202de68-5ecd-4c43-862b-601dcac5dee4.zip

Regulatory Filings

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FORM 6-K/A

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16 UNDER THE

SECURITIES EXCHANGE ACT OF 1934

dated May 17, 2011

Commission File Number 1-15148

BRF–BRASIL FOODS S.A.

(Exact Name as Specified in its Charter) N/A (Translation of Registrant’s Name)

760 Av. Escola Politecnica Jaguare 05350-000 Sao Paulo, Brazil

(Address of principal executive offices) (Zip code)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F X Form 40-F _ Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ] Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes _ No X_ If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

RESTATEMENT

fILLING WITH cvm DOES NOT IMPLY ANY ASSESMENT ABOUT THE COMPANY, BEING ITS MANAGEMENTS RESPONSIBLE FOR THE ACCURACY OF THE INFORMATION PRESENTED.

*01.01 – IDENTIFICATION*

1 - CVM Code 01629-2
4 – NIRE 35300149947

01.02 - HEAD OFFICE ADDRESS

1 - Full Address (Street, Number and Complement) Jorge Tzachel Street, 475 — 3 - Zip Code 88301-600 4 - City Itajaí 5 - State SC
6 - DDD (Long distance) 047 7 - Telephone 3249-4533 8 - Telephone 3249-4207 9 - Telephone 3249-4222 10 - Telex
11- DDD (Long distance) 047 12 - Fax 3249-4462 13 - Fax 3249-4221 14 - Fax 3249-4211
15 - E-MAIL [email protected]

01.03 - INVESTOR RELATIONS DIRECTOR (Address for correspondence with the company)

1 - Name Leopoldo Viriato Saboya — 2 - Full Address (Place, Number and Complement) 1400, Hungria Street, 5th floor 3 - District Jardim América
4 - Zip Code 01455-000 5 - City São Paulo 6 - State SP
7 - DDD (long distance) 11 8 - Telephone 2322-5052 9 - Telephone 2322-5052 10 - Telephone 2322-5052 11 - Telex
12 - DDD (long distance) 11 13 - Fax 2322-5747 14 - Fax 2322-5747 15 – Fax 2322-5747
16 - E-MAIL [email protected]

01.04 - REFERENCE / AUDITOR

CURRENT Fiscal year — 1 - BEGIN 2 – END CURRENT QUARTER — 3 - QUARTER 4 - BEGIN 5 - END PREVIOUS QUARTER — 6 - QUARTER 7 - BEGIN 8 - END
01/01/2010 12/31/2010 2 04/01/2010 06/30/2010 4 01/01/2009 03/31/2009
9 - Auditing Company KPMG Auditores Independentes 10 - CVM Code 00418-9
11 - Technical in Charge Danilo Siman Simões 12 - Technical in Charge Taxpayers’ Register 524.053.116-15

*Page: 1*

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

01.05 - CURRENT COMPOSITION OF CAPITAL

Number of Shares (Units) 1– CURRENT QUARTER 06/30/2010 2 – PREVIOUS QUARTER 03/31/2010 3 – SAME QUARTER PREVIOUS YEAR 06/30/2009
Paid-Up Capital
1 – Common 872,473,246 872,473,246 206,958,103
2 – Preferred 0 0 0
3 – Total 872,473,246 872,473,246 206,958,103
In Treasury
4 – Common 2,288,382 2,368,180 430,485
5 – Preferred 0 0 0
6 – Total 2,288,382 2,368,180 430,485

01.06 – COMPANY PROFILE

1 - TYPE OF COMPANY Commercial, industrial and others
2 – SITUATION Operational
3 - NATURE OF SHARE CONTROL National private
4 - CODE OF ACTIVITY 1220 – Food
5 - MAIN ACTIVITY Holding operational
6 - CONSOLIDATED TYPE Total
7 – TYPE OF AUDITOR’S REPORT No exception

01.07- COMPANIES NOT INCLUDED IN CONSOLIDATED FINANCIAL STATEMENTS

1 - Item 2 - General Taxpayers’ Register 3 - Name

01.08 – DECLARED AND/OR PAID DIVIDENDS DURING AND AFTER THE QUARTER

1 - ITEM 2 - EVENT 3 - APPROVAL DATE 4 - DIVIDENDS 5- BEGINNING OF PAYMENT 6- TYPE OF SHARE 7- AMOUNT PER SHARE
01 Board Meeting 06/17/2010 Interests on shareholders' equity 08/27/2010 Common 0.0611364300

Page: 2

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

01.09 – PAID-UP CAPITAL AND CHANGES IN THE CURRENT PERIOD

1 – ITEM 2 – DATE OF CHANGE 3 – CAPITAL STOCK (thousand Reais) 4 – AMOUNT (thousand Reais) 5 – SOURCE OF CHANGE 7 – QUANTITY OF ISSUED SHARES (Units) 8 – PRICE OF SHARE IN THE ISSUANCE (Reais)

01.10 – INVESTOR RELATIONS DIRECTOR

1 – DATE 05/11/2011 2 – SIGNATURE

Page: 3

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

02.01- BALANCE SHEET - ASSETS (in thousands of Brazilian Reais)

1 - Code 2 - Description 6/30/2010 12/31/2009
1 Total Assets 18,637,013 18,901,403
1.01 Current Assets 4,423,122 4,165,558
1.01.01 Cash, Banks and Investments 1,492,059 843,329
1.01.01.01 Cash and Cash Equivalents 199,035 223,434
1.01.01.02 Short-term investments 1,293,024 619,895
1.01.02 Credits 1,135,051 1,498,203
1.01.02.01 Trade accounts receivable 1,100,150 1,464,736
1.01.02.02 Other credits 34,901 33,467
1.01.03 Inventories 809,940 919,798
1.01.04 Others 986,072 904,228
1.01.04.01 Dividends and Interest on Shareholders’ Equity 5 36,651
1.01.04.02 Recoverable Taxes 404,999 256,994
1.01.04.03 Biological Assets 390,361 401,804
1.01.04.04 Other rights 119,402 140,455
1.01.04.05 Prepaid Expenses 32,969 41,574
1.01.04.06 Others financial Assets 37,252 24,747
1.01.04.07 Assets held for sale 1,084 2,003
1.02 Noncurrent assets 14,213,891 14,735,845
1.02.01 Noncurrent assets 1,360,397 1,205,744
1.02.01.01 Credits 91,799 103,107
1.02.01.01.01 Trade accounts receivable 14,741 10,487
1.02.01.01.02 Other credits 77,058 92,620
1.02.01.02 Credits with Associates 0 0
1.02.01.02.01 With Affiliates 0 0
1.02.01.02.02 With Subsidiaries 0 0
1.02.01.02.03 With Other Associates 0 0
1.02.01.03 Others 1,268,598 1,102,637
1.02.01.03.01 Marketable securities 0 0
1.02.01.03.02 Recoverable taxes 458,881 431,118
1.02.01.03.03 Deferred Taxes 545,703 427,919
1.02.01.03.04 Judicial deposits 75,287 61,321
1.02.01.03.05 Biological Assets 150,214 153,454
1.02.01.03.06 Other Receivables 38,018 28,059
1.02.01.03.07 Prepaid Expenses 495 766

Page: 4

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

02.01- BALANCE SHEET - ASSETS (in thousands of Brazilian Reais)

1 - Code 2 - Description 6/30/2010 12/31/2009
1.02.02 Permanent Assets 12,853,494 13,530,101
1.02.02.01 Investments 8,280,946 9,106,983
1.02.02.01.01 Equity in Affiliates 0 20,577
1.02.02.01.02 Equity in Affiliates – Goodwill 0 0
1.02.02.01.03 Equity in Subsidiaries 4,567,386 5,356,237
1.02.02.01.04 Equity in Subsidiaries – Goodwill 3,712,726 3,729,335
1.02.02.01.05 Other Investments 834 834
1.02.02.02 Fixed assets 3,023,051 2,891,185
1.02.02.03 Intangible 1,549,497 1,531,933
1.02.02.04 Deferred 0 0

Page: 5

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

02.02- BALANCE SHEET - LIABILITIES (in thousands of Brazilian Reais)

1 - Code 2 - Description 6/30/2010 12/31/2009
2 Total Liabilities 18,637,013 18,901,403
2.01 Current Liabilities 2,980,811 3,009,300
2.01.01 Short term Debt 726,011 1,022,191
2.01.02 Debentures 0 2,089
2.01.03 Trade Accounts Payable 950,066 976,430
2.01.04 Taxes, Charges and Contribution 88,006 90,424
2.01.04.01 Tax obligations 52,782 55,679
2.01.04.02 Social Contributions 35,224 34,745
2.01.05 Dividends Payable 12 14
2.01.06 Provisions 201,051 104,877
2.01.06.01 Provisions for vacations & 13 th salary 154,337 104,877
2.01.06.02 Participation of employees in the results 46,714 0
2.01.07 Debts with Associates 6,376 4,794
2.01.08 Others 1,009,289 808,481
2.01.08.01 Payroll 43,158 37,539
2.01.08.02 Interest on shareholders' equity 49,093 91,789
2.01.08.03 Management and employees’ profit sharing payable 0 25,931
2.01.08.04 Advance from related parties 718,875 392,470
2.01.08.05 Other obligations 44,404 115,502
2.01.08.06 Others financial liabilities 95,478 86,969
2.01.08.07 Provision for tax, civil and labor risks 58,281 58,281
2.02 Non-current liabilities 2,487,239 2,901,165
2.02.01 Non-current liabilities 2,487,239 2,901,165
2.02.01.01 Long-term debt 1,675,486 1,964,978
2.02.01.02 Debentures 0 0
2.02.01.03 Provisions 128,379 105,690
2.02.01.03.01 Provision for tax, civil and labor risks 128,379 105,690
2.02.01.04 Debts with Associates 0 0
2.02.01.05 Advance for future capital increase 0 0
2.02.01.06 Others 683,374 830,497
2.02.01.06.01 Taxes and social obligation 7,688 5,450
2.02.01.06.02 Deferred taxes 197,938 131,237
2.02.01.06.03 Advance from related parties 325,711 557,184
2.02.01.06.04 Benefits to employees plan 115,570 105,962
2.02.01.06.05 Other obligations 36,467 30,664
2.03 Deferred Income 0 0
2.04 Participation of non-controlling shareholders 0 0

Page: 6

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

02.02- BALANCE SHEET - LIABILITIES (in thousands of Brazilian Reais)

1 - Code 2 - Description 6/30/2010 12/31/2009
2.05 Shareholders’ Equity 13,168,963 12,990,938
2.05.01 Paid-in Capital 12,460,471 12,461,756
2.05.02 Capital Reserves 65,712 62,767
2.05.03 Revaluation Reserves 0 0
2.05.03.01 Owned Assets 0 0
2.05.03.02 Subsidiaries/ Affiliates 0 0
2.05.04 Profit reserves 701,590 700,101
2.05.04.01 Legal 71,009 71,009
2.05.04.02 Statutory 0 0
2.05.04.03 For contigencies 0 0
2.05.04.04 Profits realizable 0 0
2.05.04.05 Retained earnings 0 0
2.05.04.06 Special for non-distributed dividends 0 0
2.05.04.07 Other profit reserves 630,581 629,092
2.05.04.07.01 Expansion reserves 496,423 496,423
2.05.04.07.02 Increase capital reserves 160,256 160,256
2.05.04.07.03 Treasury shares (26,098) (27,587)
2.05.05 Equity evaluation adjustments (33,574) (47,555)
2.05.05.01 Securities adjustments 0 0
2.05.05.02 Retained adjustments of conversion 0 0
2.05.05.03 Business combination adjustments (33,574) (47,555)
2.05.06 Accumulated earnings/losses (25,236) (186,131)
2.05.07 Advance for future capital increase 0 0

Page: 7

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

03.01 - STATEMENT OF INCOME (in thousands of Brazilian Reais)

04/01/2010 to 01/01/2010 to 04/01/2009 to 01/01/2009 to
1-Code 2-Description 06/30/2010 06/30/2010 06/30/2009 06/30/2009
3.01 Gross Sales 3,082,446 5,889,971 2,748,733 4,302,380
3.01.01 Domestic market 2,012,572 3,921,241 1,814,678 2,842,343
3.01.02 Foreign market 1,069,874 1,968,730 934,055 1,460,037
3.02 Sales Deductions (377,443) (741,312) (346,145) (540,616)
3.03 Net Sales 2,705,003 5,148,659 2,402,588 3,761,764
3.04 Cost of Sales (2,186,437) (4,252,954) (2,114,283) (3,267,482)
3.05 Gross Profit 518,566 895,705 288,305 494,282
3.06 Operating income/expenses (385,386) (735,432) (117,743) (558,746)
3.06.01 Selling expenses (339,210) (644,211) (342,280) (470,691)
3.06.02 General and administrative (63,118) (102,098) (34,471) (57,584)
3.06.02.01 Administrative (59,866) (95,568) (30,337) (51,065)
3.06.02.02 Management compensation (3,252) (6,530) (4,134) (6,519)
3.06.03 Financial (89,529) (193,036) 238,092 233,670
3.06.03.01 Financial income 168,581 383,551 613,408 758,030
3.06.03.02 Financial expenses (258,110) (576,587) (375,316) (524,360)
3.06.04 Other operating income 33,909 12,288 26,235 109,844
3.06.05 Other operating expenses (82,571) (104,112) (40,471) (149,742)
3.06.06 Equity interest in income of associated company 155,133 295,737 35,152 (224,243)
3.07 Operating income 133,180 160,273 170,562 (64,464)
3.08 Non-operating income 0 0 0 0
3.08.01 Income 0 0 0 0
3.08.02 Expenses 0 0 0 0
3.09 Income before tax and profit sharing 133,180 160,273 170,562 (64,464)
3.10 Provision for income tax and social contribution 2,728 2,728 (17,423) (18,232)
3.11 Deferred income tax 35,543 69,569 (15,298) (1,268)
3.12 Statutory participations / contributions 0 0 0 0
3.12.01 Participation 0 0 0 0
3.12.02 Contribution 0 0 0 0

Page: 8

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

03.01 - STATEMENT OF INCOME (in thousands of Brazilian Reais)

04/01/2010 to 01/01/2010 to 04/01/2009 to 01/01/2009 to
1-Code 2-Description 06/30/2010 06/30/2010 06/30/2009 06/30/2009
3.13 Reversion of interest on shareholders' equity 0 0 0 0
3.15 Net Income 171,451 232,570 137,841 (83,964)
Number of shares (ex-treasury) 870,184,864 870,184,864 206,527,618 206,527,618
Earnings per share R$ 0.19703 0.26727 0.66742
Loss per share R$ (0.40655)

Page: 9

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

04.01 - STATEMENT OF CASH FLOWS (in thousands of Brazilian Reais)

04/01/2010 to 01/01/2010 to 04/01/2009 to 01/01/2009 to
1-Code 2-Description 06/30/2010 06/30/2010 06/30/2009 06/30/2009
4.01 Net cash provided by (used in) operating activities 463,650 1,654,654 (331,728) (290,611)
4.01.01 Net Income for the year 171,451 232,570 137,841 (83,964)
4.01.02 Changes in operating assets and liabilities 345,772 1,474,594 98,846 5,763
4.01.02.01 Trade accounts receivable 41,596 434,332 162,302 586,305
4.01.02.02 Inventories 103,226 158,021 38,862 81,175
4.01.02.03 Trade accounts payable 257 (87,789) 39,809 (63,061)
4.01.02.04 Contingencies (17,057) (30,629) (5,520) (8,394)
4.01.02.05 Payroll and related charges payable (411,890) 173,518 (185,230) (413,936)
4.01.02.06 Marketable securities held for trading (799,362) (1,317,844) (434,410) (741,789)
4.01.02.07 Redemption of Marketable securities held for trading 1,482,796 2,251,341 554,112 653,634
4.01.02.08 Marketable securities avaliable for sale 0 0 0 0
4.01.02.09 Redemption of Marketable securities avaliable for sale 0 0 0 0
4.01.02.10 Other financial assets and liabilities (8,270) (3,774) 454 15,990
4.01.02.11 Interest payment (49,528) (106,586) (71,533) (104,161)
4.01.02.12 Interest on shareholders’ equity received 4,004 4,004 0 0
4.01.03 Others (53,573) (52,510) (568,415) (212,410)
4.01.03.01 Minority shareholders 0 0 0 0
4.01.03.02 Depreciation, amortization and depletion 91,847 171,736 101,257 151,702
4.01.03.03 Amortization of goodwill 0 0 0 0
4.01.03.04 Gain on permanent asset disposals 1,416 15,127 1,991 66,376
4.01.03.05 Deferred income tax (27,830) (61,855) 15,680 (1,800)
4.01.03.06 Provision/reversal for contingencies 39,384 60,294 (23,617) (16,241)
4.01.03.07 Other provisions (618) (16,364) (7,346) 49,582
4.01.03.08 Exchange variations and interest (2,639) 74,289 (621,228) (686,272)
4.01.03.09 Law 11.638/07 effects 0 0 0 0
4.01.03.10 Equity pick-Up (155,133) (295,737) (35,152) 224,243

Page: 10

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

04.01 - STATEMENT OF CASH FLOWS (in thousands of Brazilian Reais)

04/01/2010 to 01/01/2010 to 04/01/2009 to 01/01/2009 to
1-Code 2-Description 06/30/2010 06/30/2010 06/30/2009 06/30/2009
4.02 Net cash (used in) provided by investing activities (868,147) (967,422) (208,062) (231,178)
4.02.01 Cash investments 0 0 0 0
4.02.02 Redemption of cash investments 0 0 0 (109)
4.02.03 Additions to property, plant and equipment (108,621) (172,177) (170,399) (247,355)
4.02.04 Acquisitions/formation period of breeding stock 0 0 0 0
4.02.05 Disposal of fixed assets 1,232 3,504 8,550 9,136
4.02.06 Business acquisition, net 0 0 0 0
4.02.07 Other Investments, net (704,869) (704,869) 0 0
4.02.08 Business Acquisition Additional Costs 0 0 0 0
4.02.09 Advance for future capital increase 0 0 0 0
4.02.10 Interest on shareholders’ equity received 0 0 0 0
4.02.11 Goodwill on acquisition of companies 0 0 0 0
4.02.12 Cash of incorporated company 0 1,960 0 75,224
4.02.13 Additions to biological assets (42,175) (81,696) (46,213) (68,074)
4.02.14 Additions to intangible assets (13,714) (14,144) 0 0
4.03 Net cash (used in) provided by financing activities 435,747 (716,213) 492,406 567,229
4.03.01 Debt issuance 83,240 260,428 1,116,095 1,492,730
4.03.02 Repayment of debt (principal and interest) (306,011) (875,356) (617,908) (894,982)
4.03.03 Capital increase 0 0 0 0
4.03.04 Dividends and interest on shareholders’ equity paid 0 (100,000) 0 (24,783)
4.03.05 Costs of shares issuance (482) (1,285) 0 0
4.03.06 Advance for future capital increase 659,000 0 (5,781) (5,736)
4.04 Exchange variation on cash and cash equivalents 2,213 4,582 (4,990) (5,293)
4.05 Net (decrease) increase in cash 33,463 (24,399) (52,374) 40,147
4.05.01 At the beginning of the year 165,572 223,434 122,109 29,588
4.05.02 At the end of the year 199,035 199,035 69,735 69,735

Page: 1 1

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

05.01 - STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE PERIOD FROM 04/01/2010 TO 06/30/2010 (in thousands of Brazilian Reais)

1-Code 2-Description 3- Capital Stock 4- Capital Reserves 5- Revaluation Reserves 6- Profit Reserves 7- Accumulated Earnings/Losses 8- Equity Valuation Adjustments 9- Total
5.02 Prior fiscal year adjustments 0 0 0 0 0 0 0
5.03 Adjusted balance 12,460,953 62,767 0 701,514 (143,487) (40,664) 13,041,083
5.04 Profit/loss in fiscal year 0 0 0 0 171,451 0 171,451
5.05 Allocation of income 0 0 0 0 (53,200) 0 (53,200)
5.05.01 Dividends 0 0 0 0 0 0 0
5.05.02 Interest on shareholders equity 0 0 0 0 (53,200) 0 (53,200)
5.05.03 Others destinations 0 0 0 0 0 0 0
5.06 Realization of earnings reserve 0 0 0 0 0 0 0
5.07 Equity evaluation adjustments 0 0 0 0 0 7,090 7,090
5.07.01 Securities adjustments 0 0 0 0 0 0 0
5.07.02 Retained adjustments of conversion 0 0 0 0 0 0 0
5.07.03 Business combination adjustments 0 0 0 0 0 7,090 7,090
5.08 Increase (decrease) in capital (482) 0 0 0 0 0 (482)
5.08.01 Increase in capital 0 0 0 0 0 0 0
5.08.02 Costs of shares issuance (482) 0 0 0 0 0 (482)
5.09 Capital reserve constituition /realization 0 2,945 0 0 0 0 2,945
5.10 Treasury shares 0 0 0 76 0 0 76
5.11 Other transactions of capital 0 0 0 0 0 0 0
5.12 Others 0 0 0 0 0 0 0
5.13 End balance 12,460,471 65,712 0 701,590 (25,236) (33,574) 13,168,963

Page: 1 2

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

05.02 - STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE PERIOD FROM 01/01/2010 TO 06/30/2010 (in thousands of Brazilian Reais)

1-Code 2-Description 3- Capital Stock 4- Capital Reserves 5- Revaluation Reserves 6- Profit Reserves 7- Accumulated Earnings/Losses 8- Equity Valuation Adjustments 9- Total
5.01 Beginning balance 12,461,756 62,767 0 700,101 (186,131) (47,555) 12,990,938
5.02 Prior fiscal year adjustments 0 0 0 0 0 0 0
5.03 Adjusted balance 12,461,756 62,767 0 700,101 (186,131) (47,555) 12,990,938
5.04 Profit/loss in fiscal year 0 0 0 0 232,570 0 232,570
5.05 Allocation of income 0 0 0 0 (53,200) 0 (53,200)
5.05.01 Dividends 0 0 0 0 0 0 0
5.05.02 Interest on shareholders equity 0 0 0 0 (53,200) 0 (53,200)
5.05.03 Others destinations 0 0 0 0 0 0 0
5.06 Realization of earnings reserve 0 0 0 0 0 0 0
5.07 Equity evaluation adjustments 0 0 0 0 (18,475) 13,981 (4,494)
5.07.01 Securities adjustments 0 0 0 0 0 0 0
5.07.02 Retained adjustments of conversion 0 0 0 0 0 0 0
5.07.03 Business combination adjustments 0 0 0 0 (18,475) 13,981 (4,494)
5.08 Increase (decrease) in capital (1,285) 0 0 0 0 0 (1,285)
5.08.01 Increase in capital 0 0 0 0 0 0 0
5.08.02 Costs of shares issuance (1,285) 0 0 0 0 0 (1,285)
5.09 Capital reserve constituition /realization 0 2,945 0 0 0 0 2,945
5.10 Treasury shares 0 0 0 1,489 0 0 1,489
5.11 Other transactions of capital 0 0 0 0 0 0 0
5.12 Others 0 0 0 0 0 0 0
5.13 End balance 12,460,471 65,712 0 701,590 (25,236) (33,574) 13,168,963

Page: 13

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

08.01 - BALANCE SHEET - ASSETS – CONSOLIDATED (in thousands of Brazilian Reais)

1 - Code 2 - Description 30/6/2010 31/12/2009
1 Total Assets 27,394,878 28,383,627
1.01 Current Assets 9,725,017 10,677,939
1.01.01 Cash, Banks and Investments 3,230,535 4,243,769
1.01.01.01 Cash and Cash Equivalents 1,844,608 1,898,240
1.01.01.02 Short-term investments 1,385,927 2,345,529
1.01.02 Credits 2,470,700 2,173,918
1.01.02.01 Trade accounts receivable 2,423,370 2,140,701
1.01.02.02 Other credits 47,330 33,217
1.01.03 Inventories 2,002,635 2,255,497
1.01.04 Others 2,021,147 2,004,755
1.01.04.01 Dividends and Interest on Shareholders’ Equity 0 0
1.01.04.02 Recoverable Taxes 802,049 745,591
1.01.04.03 Biological Assets 851,046 865,527
1.01.04.04 Other rights 182,335 266,396
1.01.04.05 Prepaid Expenses 88,825 51,764
1.01.04.06 Others financial Assets 38,256 27,586
1.01.04.07 Assets held for sale 58,636 47,891
1.02 Noncurrent assets 17,669,861 17,705,688
1.02.01 Noncurrent assets 4,526,205 4,537,839
1.02.01.01 Credits 91,799 105,428
1.02.01.01.01 Trade accounts receivable 14,741 12,808
1.02.01.01.02 Other credits 77,058 92,620
1.02.01.02 Credits with Associates 0 0
1.02.01.02.01 With Affiliates 0 0
1.02.01.02.02 With Subsidiaries 0 0
1.02.01.02.03 With Other Associates 0 0
1.02.01.03 Others 4,434,406 4,432,411
1.02.01.03.01 Marketable securities 567,961 676,681
1.02.01.03.02 Recoverable taxes 636,275 653,074
1.02.01.03.03 Deferred Taxes 2,497,206 2,426,412
1.02.01.03.04 Judicial deposits 165,441 135,885
1.02.01.03.05 Biological Assets 375,484 391,192
1.02.01.03.06 Other Receivables 191,379 148,213
1.02.01.03.07 Prepaid Expenses 660 954
1.02.02 Permanent Assets 13,143,656 13,167,849
1.02.02.01 Investments 13,996 17,200
1.02.02.01.01 Equity in Affiliates 0 0
1.02.02.01.02 Equity in Subsidiaries 12,970 16,138
1.02.02.01.03 Other Investments 1,026 1,062

Page: 1 4

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

08.01 - BALANCE SHEET – ASSETS -CONSOLIDATED (in thousands of Brazilian Reais)

1 - Code 2 - Description 30/6/2010 31/12/2009
1.02.02.01.06 Equity in Subsidiaries – Goodwill 0 0
1.02.02.02 Fixed assets 8,882,385 8,874,186
1.02.02.03 Intangible 4,247,275 4,276,463
1.02.02.04 Deferred 0 0

Page: 1 5

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

08.02 BALANCE SHEET – LIABILITIES - CONSOLIDATED (in thousands of Brazilian Reais)

1 - Code 2 - Description 30/6/2010 31/12/2009
2 Total Liabilities 27,394,878 28,383,627
2.01 Current Liabilities 5,151,473 6,359,230
2.01.01 Short term Debt 2,178,083 3,200,562
2.01.02 Debentures 0 2,089
2.01.03 Trade Accounts Payable 1,813,079 1,905,368
2.01.04 Taxes, Charges and Contribution 224,546 259,060
2.01.04.01 Tax obligations 154,753 183,635
2.01.04.02 Social Contributions 69,793 75,425
2.01.05 Dividends Payable 12 839
2.01.06 Provisions 364,467 300,325
2.01.06.01 Provisions for vacations & 13 th salary 317,533 224,880
2.01.06.02 Participation of employees in the results 46,934 75,445
2.01.07 Debts with Associates 0 0
2.01.08 Others 571,286 690,987
2.01.08.01 Payroll 44,180 40,829
2.01.08.02 Interest on shareholders' equity 50,017 91,790
2.01.08.03 Management and employees’ profit sharing payable 0 0
2.01.08.04 Other obligations 290,040 379,931
2.01.08.05 Others financial liabilities 95,700 87,088
2.01.08.06 Provision for tax, civil and labor risks 91,349 91,349
2.02 Non-current liabilities 9,071,916 9,028,738
2.02.01 Non-current liabilities 9,071,916 9,028,738
2.02.01.01 Long-term debt 5,818,993 5,853,459
2.02.01.02 Debentures 0 0
2.02.01.03 Provisions 960,067 940,259
2.02.01.03.01 Provision for tax, civil and labor risks 960,067 940,259
2.02.01.04 Debts with Associates 0 0
2.02.01.05 Advance for future capital increase 0 0
2.02.01.06 Others 2,292,856 2,235,020
2.02.01.06.01 Taxes and social obligation 55,567 5,951
2.02.01.06.02 Deferred taxes 1,537,117 1,456,425
2.02.01.06.03 Benefits to employees plan 266,966 249,728
2.02.01.06.04 Other obligations 433,206 522,916
2.03 Deferred Income 0 0
2.04 Participation of non-controlling shareholders 2,526 4,721
2.05 Shareholders’ Equity 13,168,963 12,990,938
2.05.01 Paid-in Capital 12,460,471 12,461,756
2.05.02 Capital Reserves 65,712 62,767
2.05.03 Revaluation Reserves 0 0
2.05.03.01 Owned Assets 0 0
2.05.03.02 Subsidiaries/ Affiliates 0 0
2.05.04 Profit reserves 701,590 700,101
2.05.04.01 Legal 71,009 71,009
2.05.04.02 Statutory 0 0
2.05.04.03 For contigencies 0 0
2.05.04.04 Profits realizable 0 0
2.05.04.05 Retained earnings 0 0

*Page: 1 6*

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

08.02 - BALANCE SHEET - LIABILITIES - CONSOLIDATED (in thousands of Brazilian Reais)

1 - Code 2 - Description 30/6/2010 31/12/2009
2.05.04.06 Special for non-distributed dividends 0 0
2.05.04.07 Other profit reserves 630,581 629,092
2.05.04.07.01 Expansion reserves 496,423 496,423
2.05.04.07.02 Increase capital reserves 160,256 160,256
2.05.04.07.03 Treasury shares (26,098) (27,587)
2.05.04.07.04 Profits unrealized 0 0
2.05.05 Equity evaluation adjustments (33,574) (47,555)
2.05.05.01 Securities adjustments 0 0
2.05.05.02 Retained adjustments of conversion 0 0
2.05.05.03 Business combination adjustments (33,574) (47,555)
2.05.06 Accumulated earnings/losses (25,236) (186,131)
2.05.07 Advance for future capital increase 0 0

Page: 17

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

9.01 - STATEMENT OF INCOME-CONSOLIDATED (in thousands of Brazilian Reais)

04/01/2010 to 01/01/2010 to 04/01/2009 to 01/01/2009 to
1-Code 2-Description 06/30/2010 06/30/2010 06/30/2009 06/30/2009
3.01 Gross Sales 6,314,608 12,129,269 3,077,966 6,062,166
3.01.01 Domestic market 3,882,506 7,568,830 1,871,307 3,707,196
3.01.02 Foreign market 2,432,102 4,560,439 1,206,659 2,354,970
3.02 Sales Deductions (783,025) (1,550,315) (374,985) (756,136)
3.03 Net Sales 5,531,583 10,578,954 2,702,981 5,306,030
3.04 Cost of Sales (4,181,425) (8,103,982) (2,183,286) (4,323,684)
3.05 Gross Profit 1,350,158 2,474,972 519,695 982,346
3.06 Operating income/expenses (1,146,683) (2,212,725) (339,771) (913,652)
3.06.01 Selling expenses (860,986) (1,649,391) (456,041) (863,803)
3.06.02 General and administrative (90,882) (158,047) (35,494) (76,295)
3.06.02.01 Administrative (85,007) (146,173) (31,360) (66,917)
3.06.02.02 Management compensation (5,875) (11,874) (4,134) (9,378)
3.06.03 Financial (148,420) (300,248) 167,564 67,248
3.06.03.01 Financial income 269,879 662,046 628,122 901,259
3.06.03.02 Financial expenses (418,299) (962,294) (460,558) (834,011)
3.06.04 Other operating income 67,499 56,352 57,262 122,150
3.06.05 Other operating expenses (112,823) (162,227) (73,062) (162,952)
3.06.06 Equity interest in income of associated company (1,071) 836 0 0
3.07 Operating income 203,475 262,247 179,924 68,694
3.08 Non-operating income 0 0 0 0
3.08.01 Income 0 0 0 0
3.08.02 Expenses 0 0 0 0
3.09 Income before tax and profit sharing 203,475 262,247 179,924 68,694
3.10 Provision for income tax and social contribution (15,774) (28,483) (12,278) (20,924)
3.11 Deferred income tax (17,354) (2,372) (29,713) (131,491)
3.12 Statutory participations / contributions 0 0 0 0
3.12.01 Profit sharing 0 0 0 0
3.12.02 Contribution 0 0 0 0

Page: 1 8

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

9.01 - STATEMENT OF INCOME - CONSOLIDATED (in thousands of Brazilian Reais)

04/01/2010 to 01/01/2010 to 04/01/2009 to 01/01/2009 to
1-Code 2-Description 06/30/2010 06/30/2010 06/30/2009 06/30/2009
3.13 Reversion of interest on shareholders' equity 0 0 0 0
3.14 Participation of non-controlling shareholders 1,104 1,178 (92) (243)
3.15 Net Income 171,451 232,570 137,841 (83,964)
Number of shares (ex-treasury) 870,184,864 870,184,864 206,527,618 206,527,618
Earnings per share R$ 0 0 1
Loss per share R$ (0)

Page: 1 9

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

10.01 - STATEMENT OF CASH FLOWS - CONSOLIDATED (in thousands of Brazilian Reais)

04/01/2010 to 01/01/2010 to 04/01/2009 to 01/01/2009 to
1-Code 2-Description 06/30/2010 06/30/2010 06/30/2009 06/30/2009
4.01 Net cash provided by (used in) operating activities 1,318,637 1,567,280 92,177 45,519
4.01.01 Net Income for the year 171,451 232,570 137,841 (83,964)
4.01.02 Changes in operating assets and liabilities 734,544 573,407 355,749 186,013
4.01.02.01 Trade accounts receivable (190,925) (324,018) 207,140 219,270
4.01.02.02 Inventories 238,748 274,981 84,516 172,165
4.01.02.03 Trade accounts payable 42,712 (79,653) 43,685 (16,343)
4.01.02.04 Contingencies (17,055) (30,793) (5,524) (8,662)
4.01.02.05 Payroll and related charges payable (39,228) (146,584) (7,442) (180,933)
4.01.02.06 Marketable securities held for trading (813,192) (1,386,574) (514,935) (1,063,976)
4.01.02.07 Redemption of Marketable securities held for trading 1,522,043 2,423,195 596,135 1,166,385
4.01.02.08 Marketable securities avaliable for sale (37,103) (289,434) 0 0
4.01.02.09 Redemption of Marketable securities avaliable for sale 119,505 424,008 38,533 39,306
4.01.02.10 Other financial assets and liabilities 2,373 8,612 454 9,086
4.01.02.11 Interest payment (97,338) (304,337) (86,813) (150,285)
4.01.02.12 Interest on shareholders’ equity received 4,004 4,004 0 0
4.01.03 Others 412,642 761,303 (401,413) (56,530)
4.01.03.01 Minority shareholders (1,104) (1,178) 92 243
4.01.03.02 Depreciation, amortization and depletion 214,521 394,128 106,397 217,725
4.01.03.03 Amortization of goodwill 0 0 0 0
4.01.03.04 Gain on permanent asset disposals 22,351 58,428 1,356 50,005
4.01.03.05 Deferred income tax 19,887 (184) 25,599 129,500
4.01.03.06 Provision/reversal for contingencies 25,854 58,030 (23,674) (22,976)
4.01.03.07 Other provisions (16,158) (28,975) (10,073) (941)
4.01.03.08 Exchange variations and interest 146,220 281,890 (501,110) (430,086)
4.01.03.09 Law 11.638/07 effects 0 0 0 0
4.01.03.10 Equity pick-Up 1,071 (836) 0 0

Page: 20

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

10.01 - STATEMENT OF CASH FLOWS (in thousands of Brazilian Reais) – CONSOLIDATED

04/01/2010 to 01/01/2010 to 04/01/2009 to 01/01/2009 to
1-Code 2-Description 06/30/2010 06/30/2010 06/30/2009 06/30/2009
4.02 Net cash (used in) provided by investing activities (261,927) (425,813) (216,331) (365,788)
4.02.01 Cash investments 0 0 0 (109)
4.02.02 Redemption of cash investments 2,251 4,319 0 0
4.02.03 Additions to property, plant and equipment (151,208) (236,125) (175,825) (296,348)
4.02.04 Acquisitions/formation period of breeding stock 0 0 0 0
4.02.05 Disposal of fixed assets 1,154 3,504 7,251 24,669
4.02.06 Business acquisition, net 0 0 0 0
4.02.07 Other Investments, net 0 0 0 0
4.02.08 Business Acquisition Additional Costs 0 0 0 0
4.02.09 Advance for future capital increase 0 0 0 0
4.02.10 Interest on shareholders’ equity received 0 0 0 0
4.02.11 Goodwill on acquisition of companies 0 0 0 0
4.02.12 Cash of incorporated company 0 0 0 0
4.02.13 Additions to biological assets (99,118) (181,733) (47,757) (94,000)
4.02.14 Additions to intangible assets (15,006) (15,778) 0 0
4.03 Net cash (used in) provided by financing activities (497,101) (1,192,177) (41,251) (4,807)
4.03.01 Debt issuance 112,127 1,880,442 636,376 1,130,318
4.03.02 Repayment of debt (principal and interest) (608,746) (2,971,334) (677,627) (1,110,342)
4.03.03 Capital increase 0 0 0 0
4.03.04 Dividends and interest on shareholders’ equity paid 0 (100,000) 0 (24,783)
4.03.05 Costs of shares issuance (482) (1,285) 0 0
4.03.06 Advance for future capital increase 0 0 0 0
4.04 Exchange variation on cash and cash equivalents 10,238 (2,922) (85,163) (88,538)
4.05 Net (decrease) increase in cash 569,847 (53,632) (250,568) (413,614)
4.05.01 At the beginning of the year 1,274,761 1,898,240 1,070,409 1,233,455
4.05.02 At the end of the year 1,844,608 1,844,608 819,841 819,841

Page: 2 1

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

11.01 - STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE PERIOD FROM 04/01/2010 TO 06/30/2010 (in thousands of Brazilian Reais) - CONSOLIDATED

1-Code 2-Description 3- Capital Stock 4- Capital Reserves 5- Revaluation Reserves 6- Profit Reserves 7- Accumulated Earnings/Losses 8- Equity Valuation Adjustments 9- Total
5.01 Beginning balance 12,460,953 62,767 0 700,514 (143,487) (40,664) 13,040,083
5.02 Prior fiscal year adjustments 0 0 0 0 0 0 0
5.03 Adjusted balance 12,460,953 62,767 0 700,514 (143,487) (40,664) 13,040,083
5.04 Profit/loss in fiscal year 0 0 0 0 171,451 0 171,451
5.05 Allocation of income 0 0 0 0 (53,200) 0 (53,200)
5.05.01 Dividends 0 0 0 0 0 0 0
5.05.02 Interest on shareholders equity 0 0 0 0 (53,200) 0 (53,200)
5.05.03 Others destinations 0 0 0 0 0 0 0
5.06 Realization of earnings reserve 0 0 0 0 0 0 0
5.07 Equity evaluation adjustments 0 0 0 0 0 7,090 7,090
5.07.01 Securities adjustments 0 0 0 0 0 0 0
5.07.02 Retained adjustments of conversion 0 0 0 0 0 0 0
5.07.03 Business combination adjustments 0 0 0 0 0 7,090 7,090
5.08 Increase (decrease) in capital (482) 0 0 0 0 0 (482)
5.08.01 Increase in capital 0 0 0 0 0 0 0
5.08.02 Costs of shares issuance (482) 0 0 0 0 0 (482)
5.09 Capital reserve constituition /realization 0 2,945 0 0 0 0 2,945
5.10 Treasury shares 0 0 0 76 0 0 76
5.11 Other transactions of capital 0 0 0 0 0 0 0
5.12 Others 0 0 0 0 0 0 0
5.13 End balance 12,460,471 65,712 0 701,590 (25,236) (33,574) 13,168,963

Page: 2 2

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01.01 - IDENTIFICATION*

1 - CVM Code 01629-2 2 - Company Name BRF – BRASIL FOODS S.A. 3 - General Taxpayers’ Register 01.838.723/0001-27

11.02 - STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE PERIOD FROM 01/01/2010 TO 06/30/2010 (in thousands of Brazilian Reais) - CONSOLIDATED

1-Code 2-Description 3- Capital Stock 4- Capital Reserves 5- Revaluation Reserves 6- Profit Reserves 7- Accumulated Earnings/Losses 8- Equity Valuation Adjustments 9- Total
5.01 Beginning balance 12,461,756 62,767 0 700,101 (186,131) (47,555) 12,990,938
5.02 Prior fiscal year adjustments 0 0 0 0 0 0 0
5.03 Adjusted balance 12,461,756 62,767 0 700,101 (186,131) (47,555) 12,990,938
5.04 Profit/loss in fiscal year 0 0 0 0 232,570 0 232,570
5.05 Allocation of income 0 0 0 0 (53,200) 0 (53,200)
5.05.01 Dividends 0 0 0 0 0 0 0
5.05.02 Interest on shareholders equity 0 0 0 0 (53,200) 0 (53,200)
5.05.03 Others destinations 0 0 0 0 0 0 0
5.06 Realization of earnings reserve 0 0 0 0 0 0 0
5.07 Equity evaluation adjustments 0 0 0 0 (18,475) 13,981 (4,494)
5.07.01 Securities adjustments 0 0 0 0 0 0 0
5.07.02 Retained adjustments of conversion 0 0 0 0 0 0 0
5.07.03 Business combination adjustments 0 0 0 0 (18,475) 13,981 (4,494)
5.08 Increase (decrease) in capital (1,285) 0 0 0 0 0 (1,285)
5.08.01 Increase in capital 0 0 0 0 0 0 0
5.08.02 Costs of shares issuance (1,285) 0 0 0 0 0 (1,285)
5.09 Capital reserve constituition /realization 0 2,945 0 0 0 0 2,945
5.10 Treasury shares 0 0 0 1,489 0 0 1,489
5.11 Other transactions of capital 0 0 0 0 0 0 0
5.12 Others 0 0 0 0 0 0 0
5.13 End balance 12,460,471 65,712 0 701,590 (25,236) (33,574) 13,168,963

Page: 23

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

1. RESTATEMENT OF THE QUARTERLY INFORMATION, ADOPTION OF THE INTERNATIONAL ACCOUNTING FINANCIAL REPORTING STANDARDS AND MANAGEMENT STATEMENT

As from December 31, 2007, the Brazilian agencies responsible for accounting matters started to regulate Brazilian accounting practices in order for them to conform to the international financial reporting standards (“IFRS”), issued by The International Accounting Standards Board (“IASB”). The convergence process occurred in two stages: (1) in 2008, with the issuance of accounting pronouncements CPC 01 to CPC 14, which were applied by the Company to its individual and consolidated financial statements as of December 31, 2008; and (2) in 2009, with the issuance of accounting pronouncements CPC 15 to CPC 41 and 43 (except for CPC 34 – not yet issued), besides ICPCs and OCPCs, all of which were approved and also adopted by Brazilian Exchange Securities Commission (“CVM”).

The new accounting practices provided for in technical pronouncements CPC 15 to CPC 41 and 43 were initially adopted by the Company in the fiscal year ended December 31, 2010. The transition date adopted by the Company was January 1, 2009, the date on which the opening balance sheets were prepared in accordance with the new accounting practices. Management acknowledges that the pronouncements issued by CPC and approved by CVM conform to IFRS.

As a result of the IFRS adoption and as required by CVM through the Deliberation No. 603/09, the Company is restating the quarterly information (parent company and consolidated) for the period of three and six month ended June 30, 2010 previously issued on August 13, 2010, in order to incorporate the accounting deliberations issued by CVM during 2010, as presented below:

· CPC 15 – Business Combinations, approved by CVM Deliberation No. 580/09 corresponding to IFRS 3;

· CPC 16 (R1) – Inventories, approved by CVM Deliberation No. 575/09 corresponding to IAS 2;

· CPC 20 – Borrowing Costs, approved by CVM Deliberation No. 577/09 corresponding to IAS 23;

· CPC 21 – Interim Financial Reporting, approved by CVM Deliberation No. 581/09 corresponding to IAS 34 and IFRIC 10;

Page: 2 4

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

· CPC 22 – Segment Reporting, approved by CVM Deliberation No. 582/09 corresponding to IFRS 8;

· CPC 23 – Accounting policies, Changes in Accounting Estimates and Errors, approved by CVM Deliberation No. 592/09 corresponding to IAS 8;

· CPC 26 – Presentation of Financial Statements, approved by CVM Deliberation No. 595/09 corresponding to IAS 1;

· CPC 27 – Property, Plant and Equipment, approved by CVM Deliberation No. 583/09 corresponding to IAS 16;

· CPC 29 – Biological Assets and Agricultural Products, approved by CVM Deliberation No. 596/09 corresponding to IAS 41;

· CPC 32 – Income Taxes, approved by CVM Deliberation No. 599/09 corresponding to IAS 12 and SIC 21;

· CPC 33 – Employee Benefits, approved by CVM Deliberation No. 600/09 corresponding to IAS 19 and IFRIC 14;

· CPC 37 (R1) – First-time adoption of International Financial Reporting Standards (IFRS), approved by CVM Deliberation No. 609/09 corresponding to IAS 27;

· CPC 41 – Earnings per Share, approved by CVM Deliberation No. 636/10 corresponding to IAS 33;

· CPC 43 (R1) - First-time adoption of Technical Pronouncements 15 to 40, approved by CVM Deliberation No. 610/09;

· ICPC 09 - Individual, Separate and Consolidated Financial Statements and application of the equity method;

· ICPC 10 – Clarifications on CPC 27 and CPC 28; and

· ICPC 12 – Changes in Existing Decommissioning, Restoration and Similar Liabilities.

Thereby, the quarterly information (parent company and consolidated), now restated, are in accordance with the accounting practices adopted in Brazil which comprise the CVM accounting rules and the pronouncements and interpretations issued by the Accounting Pronouncements Committee (“CPC”), being totally converted to IFRS.

Page: 2 5

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The Company´s individual quarterly information has been prepared in accordance with the accounting practices adopted in Brazil and for presentation purposes are identified as (“BR GAAP”). Such quarterly information differ from IFRS in relation to the evaluation of investiments in associates and joint ventures, which were measured and recorded based on the equity accouting method rather than at cost or fair value, as is required by IFRS.

The effects of the amendments to the accounting practices in the shareholders’ equity and in the statement of income previously issued are presented below:

Reconciliation of shareholders’ equity

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 12.31.09 06.30.10 12.31.09
Shareholders' equity disclosed according to prior accounting practices 13,312,573 13,164,164 13,284,082 13,134,650
Reversal of deferred assets (a) (115,403) (133,541) (172,268) (201,940)
Other employees benefits (b) (87,624) (105,962) (88,877) (112,243)
Transfer freight (c) (13,695) (6,796) (19,842) (15,925)
Business combination (d) - (5,098) 98,411 111,620
Effect of income taxes on the above adjustments (e) 73,685 83,742 70,543 74,776
Effect of IFRSs/CPCs in interest in subsidiaries (f) 31,004 23,943 - -
Unrealized profit in sales to subsidiaries (g) (3,132) (2,742) - -
Employee participation (h) (3,086) - (3,086) -
Treasury shares (g) (25,359) (26,772) - -
Shareholders' equity disclosed according to BR GAAP / IFRS 13,168,963 12,990,938 13,168,963 12,990,938

Reconciliation of income (loss) for the period

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 06.30.09 06.30.10 06.30.09
Net income (loss) disclosed according to prior accounting practices 184,609 (117,418) 184,219 (96,659)
Reversal of deferred assets (a) 18,138 11,437 29,672 17,887
Other employees benefits (b) 18,338 (7,372) 23,366 (7,372)
Transfer freight (c) (6,899) (5,238) (3,917) 8,720
Business combination (d) - - 27,227 -
Effect of income taxes on the above adjustments (e) (9,010) 399 (24,911) (6,540)
Effect of IFRSs/CPCs in interest in subsidiaries (f) 30,870 13,469 - -
Unrealized profit in sales to subsidiaries (g) (390) 20,759 - -
Employee participation (h) (3,086) - (3,086) -
Net income (loss) disclosed according to BR GAAP / IFRS 232,570 (83,964) 232,570 (83,964)

(a) Deferred charges: upon first-time adoption of Law 11638/07, the Company’s Management elected to maintain the balance of deferred charges until its full realization, subject to analysis of its recovery pursuant to CVM Deliberation No. 527/07, subsequently amended by CVM Deliberation No. 639/10. In 2010, in order for BR GAAP to conform to IFRS, Management elected to change the

Page: 2 6

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

accounting policy for deferred charges and wrote off the total balance against the retained earnings account of January 1, 2009, as presented in the table above. In the parent company’s quarterly information statements this accounting practice was voluntarily adopted.

(b) Other employee benefits: mainly comprised of benefits upon termination, such as medical plan, F.G.T.S. penalty, termination compensation and supplementary retirement plan, being mandatory the recognition of actuarial gains and losses directly in the specific account in the shareholders’ equity and prior service cost recognized directly in the statement of income.

(c) Transfer freight: transfer freight expenditures, previously recorded as prepaid expenses, have been reclassified to inventories. The costs related to storage and distribution centers have been reclassified to the statement of income within selling expenses aiming to standardize accounting practices between the entities included in the consolidation in order to meet the requirements of CVM Deliberation No. 608/09.

(d) Business combination: according to the previous accounting practice, goodwill represented the difference between the amount paid and the carrying amount attributed to the net assets acquired; however, pursuant to CVM Deliberation No. 580/09, goodwill is the difference calculated between the net fair value of the assets acquired and liabilities assumed, including intangible assets, and, as a consequence, the business combination with Sadia, carried out on July 8, 2009, has been remeasured to comply with the prevailing legislation (note 6).

(e) Effect of deferred income tax and social contribution on the adjustments described in items (a) to (d) above.

(f) Effect of equity method pick up of adjustments from (a) to (c) above.

(g) Effect of unrealized profit and treasury shares in subsidiaries.

(h) Effect of IFRS adoption adjustments on the Company´s obligation related to profit sharing.

Additionally to the adjustments presented above and in order to attend the new accounting requirements, the Company’s management made some reclassification in the balance sheet and in the statement of income as presented below:

  • Judicial deposits previously presented within the balance of provision for tax, civil and labor risks were reclassified to the non-current assets;
  • The balance related to live animals for slaughtering previously classified as inventories was reclassified to the biological assets group in the current assets;

Page: 2 7

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

  • The balance related to breeding animals previously classified in the property, plant and equipment group was reclassified to the biological assets group in the non-current assets;

  • The balance related to derivatives transactions previously classified as loans and financing was reclassified to the other financial assets or liabilities;

  • The assets available for sale previously classified in other assets group were reclassified to assets held for sale group;

  • The non-controlling interest previously classified in a stand-alone group between liabilities and the shareholders’ equity was reclassified to the shareholders’ equity group; and

  • For the periods and fiscal years presented for comparison purposes, the transaction related to assigned receivables in the domestic market made by the wholly-owned subsidiary Sadia, was reclassified from accounts receivable in current assets to loans and financing in current liabilities.

As a result of the convergence process, the Company, as of the transition date, applied certain voluntary exemptions provided for in the standards issued by CVM, as follows:

  • Business combinations: the Company applied the exemption referring to business combinations, electing not to restate the business combinations carried out before the transition date. Goodwill calculated prior to the transition date was maintained and is subject to annual impairment testing.

  • Use of deemed cost for property, plant and equipment: the Company elected not to measure property, plant and equipment at fair value as deemed cost taking into consideration that: (i) the cost method, net of a provision for losses, is the best method to value the Company’s PP&E; (ii) the Company’s PP&E is divided into well-defined classes of assets related to its operating activities; (iii) in 2009, the Company reviewed the estimated useful lives of its PP&E; and (iv) the Company has efficient controls over PP&E items that enable the identification of losses and changes in estimated useful lives.

  • Actuarial gains and losses: the Company’s management recognized the actuarial gains and losses immediately through other comprehensive income, with immediate effect in the shareholders equity in the retained earnings. If an asset is determined in the end of the fiscal year and if this asset is above the asset ceiling, it will be recorded in shareholders equity through other comprehensive income. At the transition date no asset was recognized by the Company.

Page: 2 8

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The mandatory exemptions provided for in CVM standards were in accordance with the accounting practices previously adopted by the Company, and, therefore, had no impact on the consolidated and individual quarterly information.

The Company’s individual and consolidated quarterly information, are expressed in thousands of Brazilian Reais, as well as, the amount of other currencies disclosed in the quarterly information, when applicable, were expressed in thousands. The amounts presented in the explanatory notes related to the statement of income comprise six months period.

The preparation of the Company’s quarterly information requires Management to make judgments, use estimates and adopt assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, as well as the disclosures of contingent liabilities, as of the reporting date as disclosed in note 3.30. However, the uncertainty inherent to these judgments, assumptions and estimates could lead to results requiring a material adjustment to carrying amount of the affected asset or liability in future periods.

The settlement of the transactions involving these estimates can result in amounts that significantly differ from those recorded in the quarterly information due to the lack of precision inherent to the estimation process. The Company reviews its judgments, estimates and assumptions on a quarterly basis.

The parent company and consolidated quarterly information were prepared based on the historical cost except for the following material items recognized in the balance sheet:

· derivative financial instruments measured at fair value;

· derivative financial instruments measured at fair value through the statement of income ;

· financial assets available for sale measured at fair value; and

Page: 2 9

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

· assets and liabilities of acquired companies from January 1, 2009 recorded initially at fair value.

Additionally, in order to fully comply with the requirements of Deliberation CVM No. 603/09, the quarterly information comprising the balance sheet position as of the transition date which was January 1, 2009, is present below.

Page: 3 0

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BRF - BRASIL FOODS S.A.
BALANCE SHEETS
June 30, 2010 and December 31, 2009 and January 1, 2009
(Amounts expressed in thousands of Brazilian reais)
Parent company Consolidated
Assets Note 06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Current assets
Cash and cash equivalents 7 199,035 223,434 29,588 1,844,608 1,898,240 1,233,455
Marketable securities 8 1,293,024 619,895 42,118 1,385,927 2,345,529 742,549
Trade accounts receivable, net 9 1,100,150 1,464,736 308,294 2,423,370 2,140,701 1,378,046
Interest on shareholders' equity receivable 5 36,651 5 - - -
Inventories 10 809,940 919,798 205,804 2,002,635 2,255,497 1,285,371
Biological assets 11 390,361 401,804 80,756 851,046 865,527 427,374
Recoverable taxes 13 404,999 256,994 337,231 802,049 745,591 576,337
Assets held for sale 12 1,084 2,003 2,241 58,636 47,891 5,770
Other financial assets 21 37,252 24,747 10,405 38,256 27,586 79,211
Other current assets 187,272 215,496 50,048 318,490 351,377 189,241
Total current assets 4,423,122 4,165,558 1,066,490 9,725,017 10,677,939 5,917,354
Non-current assets
Marketable securities 8 - - 155 567,961 676,681 155
Trade accounts receivable, net 9 14,741 10,487 3,329 14,741 12,808 11,578
Credit notes 9 77,058 92,620 16,157 77,058 92,620 54,889
Recoverable taxes 13 458,881 431,118 111,021 636,275 653,074 147,490
Deferred income tax 14 545,703 427,919 253,190 2,497,206 2,426,412 550,834
Judicial deposits 15 75,287 61,321 26,293 165,441 135,885 56,093
Biological assets 11 150,214 153,454 29,850 375,484 391,192 158,846
Other current assets 38,513 28,825 18,637 192,039 149,167 30,540
Investments 16 8,280,946 9,106,983 2,708,645 13,996 17,200 1,028
Property, plant and equipment, net 17 3,023,051 2,891,185 601,943 8,882,385 8,874,186 2,747,792
Intangible assets 18 1,549,497 1,531,933 1,464,376 4,247,275 4,276,463 1,557,552
Total non-current assets 14,213,891 14,735,845 5,233,596 17,669,861 17,705,688 5,316,797
Total assets 18,637,013 18,901,403 6,300,086 27,394,878 28,383,627 11,234,151

Page: 31

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BRF - BRASIL FOODS S.A.
BALANCE SHEETS
June 30, 2010 and December 31, 2009 and January 1, 2009
(Amounts expressed in thousands of Brazilian reais)
Parent company Consolidated
Liabilities Note 06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Current liabilities
Short-term debt 20 726,011 1,022,191 723,637 2,178,083 3,200,562 1,574,720
Debentures 20 - 2,089 - - 2,089 4,185
Trade accounts payable 19 950,066 976,430 340,535 1,813,079 1,905,368 1,083,385
Payroll and related charges 232,719 177,161 32,816 431,506 341,134 173,181
Tax payable 52,782 55,679 19,578 154,753 183,635 66,578
Interest on shareholders' equity 49,105 91,803 23,295 50,029 92,629 23,327
Management and employees profit sharing 46,714 25,931 10,358 46,934 75,445 17,893
Debts with related companies 28 6,376 4,794 58,552 - - -
Other financial liabilities 21 95,478 86,969 7,410 95,700 87,088 146,712
Provision for tax, civil and labor 25 58,281 58,281 29,425 91,349 91,349 38,927
Other liabilities with related parties 28 718,875 392,470 - - - -
Other current liabilities 44,404 115,502 11,317 290,040 379,931 70,090
Total current liabilities 2,980,811 3,009,300 1,256,923 5,151,473 6,359,230 3,198,998
Non-current liabilities
Long-term debt 20 1,675,486 1,964,978 879,023 5,818,993 5,853,459 3,719,692
Social and tax payable 7,688 5,450 8,121 55,567 5,951 20,056
Provision for tax, civil and labor 25 128,379 105,690 89,453 960,067 940,259 180,215
Deferred income tax 14 197,938 131,237 50,507 1,537,117 1,456,425 73,322
Other liabilities with related parties 28 325,711 557,184 - - - -
Employee benefit plan 24 115,570 105,962 84,225 266,966 249,728 84,225
Other non-current liabilities 36,467 30,664 7,193 433,206 522,916 32,306
Total non-current liabilities 2,487,239 2,901,165 1,118,522 9,071,916 9,028,738 4,109,816
Shareholders' equity 26
Capital 12,460,471 12,461,756 3,445,043 12,460,471 12,461,756 3,445,043
Capital reserves 65,712 62,767 - 65,712 62,767 -
Profit reserves 727,688 727,688 731,527 727,688 727,688 731,527
Accumulated deficit (25,236) (186,131) (212,985) (25,236) (186,131) (212,985)
Treasury shares (26,098) (27,587) (815) (26,098) (27,587) (815)
Other comprehensive income (loss) (33,574) (47,555) (38,129) (33,574) (47,555) (38,129)
Parent company shareholders' equity 13,168,963 12,990,938 3,924,641 13,168,963 12,990,938 3,924,641
Non-controlling interest - - - 2,526 4,721 696
Shareholders' equity 13,168,963 12,990,938 3,924,641 13,171,489 12,995,659 3,925,337
Total liabilities and shareholders'equity 18,637,013 18,901,403 6,300,086 27,394,878 28,383,627 11,234,151

Page: 32

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BRF - BRASIL FOODS S.A.
STATEMENTS OF INCOME
For the three and six month period ended June 30, 2010 and June 30, 2009
(Amounts expressed in thousands of Brazilian reais, except earnings per share data)
Parent company Consolidated
04.01.10 01.01.10 04.01.09 01.01.09 04.01.10 01.01.10 04.01.09 01.01.09
to to to to to to to to
Note 06.30.10 06.30.10 06.30.09 06.30.09 06.30.10 06.30.10 06.30.09 06.30.09
Net sales 29 2,705,003 5,148,659 2,402,588 3,761,764 5,531,583 10,578,954 2,702,981 5,306,030
Cost of sales 34 (2,186,437) (4,252,954) (2,114,283) (3,267,482) (4,181,425) (8,103,982) (2,183,286) (4,323,684)
Gross profit 518,566 895,705 288,305 494,282 1,350,158 2,474,972 519,695 982,346
Operating income (expenses)
Sales 34 (339,210) (644,211) (342,280) (470,691) (860,986) (1,649,391) (456,041) (863,803)
General and administrative 34 (63,118) (102,098) (34,471) (57,584) (90,882) (158,047) (35,494) (76,295)
Other operating expenses 32 (48,662) (91,824) (14,236) (39,898) (45,324) (105,875) (15,800) (40,802)
Equity interest in income of subsidiaries 16 155,133 295,737 35,152 (224,243) (1,071) 836 - -
Operating income (loss) 222,709 353,309 (67,530) (298,134) 351,895 562,495 12,360 1,446
Financial expenses 33 (258,110) (576,587) (375,316) (524,360) (418,299) (962,294) (460,558) (834,011)
Financial income 33 168,581 383,551 613,408 758,030 269,879 662,046 628,122 901,259
Income (loss) before taxes and participation of non-controlling shareholders 133,180 160,273 170,562 (64,464) 203,475 262,247 179,924 68,694
Income and social contribution tax expense 14 2,728 2,728 (17,423) (18,232) (15,774) (28,483) (12,278) (20,924)
Deferred income and social contribution tax benefit (expense) 14 35,543 69,569 (15,298) (1,268) (17,354) (2,372) (29,713) (131,491)
Net income (loss) 171,451 232,570 137,841 (83,964) 170,347 231,392 137,933 (83,721)
Attributable to:
BRF shareholders 171,451 232,570 137,841 (83,964) 171,451 232,570 137,841 (83,964)
Non-controlling shareholders - - - - (1,104) (1,178) 92 243
Weighted average shares outstanding at the end of the year (thousands) - Basic 870,184,864 870,184,864 413,055,236 413,055,236 870,184,864 870,184,864 413,055,236 413,055,236
Earnings (loss) per share - Basic 27 0.20 0.27 0.33 (0.20) 0.20 0.27 0.33 (0.20)
Weighted average shares outstanding at the end of the year (thousands) - Diluted 872,389,943 872,389,943 413,055,236 413,055,236 872,389,943 872,389,943 413,055,236 413,055,236
Earnings (loss) per share - Diluted 27 0.20 0.27 0.33 (0.20) 0.20 0.27 0.33 (0.20)

Page: 33

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BRF - BRASIL FOODS S.A.
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the three and six month period ended June 30, 2010 and June 30, 2009
(Amounts expressed in thousands of Brazilian reais)
Parent company Consolidated
04.01.10 01.01.10 04.01.09 01.01.09 04.01.10 01.01.10 04.01.09 01.01.09
to to to to to to to to
06.30.10 06.30.10 06.30.09 06.30.09 06.30.10 06.30.10 06.30.09 06.30.09
Net income 171,451 232,570 137,841 (83,964) 170,347 231,392 137,933 (83,721)
Gain (loss) in foreign currency translation adjustments 422 (4,940) (1,998) (4,149) 422 (4,940) (1,998) (4,149)
Unrealized gain (loss) in available for sale marketable securities,
net of income taxes (R$210) in 2010 and R$467 in 2009. 120 630 (1,114) (1,401) 120 630 (1,114) (1,401)
Unrealized gains (loss) in cash flow hedge,
net of income taxes (R$1.621) in 2010 and R$2.123 in 2009. 16,426 19,573 7,984 3,864 16,426 19,573 7,984 3,864
Actuarial loss,
net of income taxes R$4.428 in 2010. (9,878) (1,282) - - (9,878) (1,282) - -
Net income (loss) recored directly in the shareholders' equity 7,090 13,981 4,872 (1,686) 7,090 13,981 4,872 (1,686)
Comprehensive income 178,541 246,551 142,713 (85,650) 177,437 245,373 142,805 (85,407)
Attributable to:
BRF shareholders 178,541 246,551 142,713 (85,650) 178,541 246,551 142,713 (85,650)
Non-controlling shareholders - - - - (1,104) (1,178) 92 243

Page: 34

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BRF - BRASIL FOODS S.A.
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Period ended December 31, 2009 and June 30, 2010
(Amounts expressed in thousands of Brazilian reais, except interest on own capital per share data)
Attributed to interest of controlling shareholders
Capital reserve Profit reserves Other comprehensive income
Capital Capital reserve Treasury shares Legal reserve Reserve for expansion Reserve for capital increases Accumulated foreign currency translation adjustments Available for sale marketable securities Actuarial gains (losses) Accumulated deficit Total shareholders' equity (Parent Company) Non-controlling interest Total shareholders' equity(Consolidated)
BALANCES AT JANUARY 1 st , 2009 3,445,043 - (815) 66,201 505,070 160,256 (1,052) (37,077) - (212,985) 3,924,641 696 3,925,337
Comprehensive income:
Gain in foreign currency translation adjustments - - - - - - 19,647 - - - 19,647 8,449 28,096
Unrealized loss in available for sale marketable securities - - - - - - (1,245) - - - (1,245) - (1,245)
Unrealized loss in cash flow hedge - - - - - - - (4,738) - - (4,738) - (4,738)
Actuarial gain (loss) - - - - - - - - (23,090) - (23,090) - (23,090)
Net income (loss) for the year - - - - - - - - - 123,015 123,015 (4,424) 118,591
TOTAL COMPREHENSIVE INCOME - - - - - - 17,350 (41,815) (23,090) (89,970) 4,038,230 4,721 4,042,951
Capital increase 9,108,374 - - - - - - - - - 9,108,374 - 9,108,374
Appropriation of income (loss):
Interest on shareholders' equity - R$ 0.229985 per
outstanding share at the end of the year - - - - - - - - - (100,000) (100,000) - (100,000)
Legal reserve - - - 4,808 - - - - - (4,808) - - -
Reserve for expansion - - - - (8,647) - - - - 8,647 - - -
Valuation of shares - 62,767 - - - - - - - - 62,767 - 62,767
Cost of shares issuance (91,661) - - - - - - - - - (91,661) - (91,661)
Treasury shares - - (26,772) - - - - - - - (26,772) - (26,772)
BALANCES AT DECEMBER 31, 2009 12,461,756 62,767 (27,587) 71,009 496,423 160,256 17,350 (41,815) (23,090) (186,131) 12,990,938 4,721 12,995,659
Comprehensive income:
Gain (loss) in foreign currency translation adjustments - - - - - - (4,940) - - - (4,940) (1,017) (5,957)
Unrealized gain in available for sale marketable securities - - - - - - 630 - - - 630 - 630
Unrealized gains in cash flow hedge - - - - - - - 19,573 - - 19,573 - 19,573
Actuarial gain (loss) - - - - - - - - (1,282) (18,475) (19,757) - (19,757)
Net income for the period - - - - - - - - - 232,570 232,570 (1,178) 231,392
TOTAL COMPREHENSIVE INCOME - - - - - - 13,040 (22,242) (24,372) 27,964 13,219,014 2,526 13,221,540
Appropriation of income (loss):
Interest on shareholders' equity - R$ 0.06114 per outstanding
share at the end of the year - - - - - - - - - (53,200) (53,200) - (53,200)
Share-based payments - 2,945 - - - - - - - - 2,945 - 2,945
Cost of shares issuance (1,285) - - - - - - - - - (1,285) - (1,285)
Treasury shares - - 1,489 - - - - - - - 1,489 - 1,489
BALANCES AT JUNE 30, 2010 12,460,471 65,712 (26,098) 71,009 496,423 160,256 13,040 (22,242) (24,372) (25,236) 13,168,963 2,526 13,171,489

Page: 35

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BRF - BRASIL FOODS S.A.
STATEMENTS OF CASH FLOWS
For the three and six month period ended June 30, 2010 and June 30, 2009
(Amounts expressed in thousands of Brazilian reais)
Parent company Consolidated
04.01.10 01.01.10 04.01.09 01.01.09 04.01.10 01.01.10 04.01.09 01.01.09
to to to to to to to to
06.30.10 06.30.10 06.30.09 06.30.09 06.30.10 06.30.10 06.30.09 06.30.09
Operating activities:
Net income for the year 171,451 232,570 137,841 (83,964) 171,451 232,570 137,841 (83,964)
Adjustments to reconcile net income to net cash provided by operating activities:
Non-controlling shareholders - - - - (1,104) (1,178) 92 243
Depreciation, amortization and depletion 91,847 171,736 101,257 151,702 214,521 394,128 106,397 217,725
Equity interest in income of subsidiaries (155,133) (295,737) (35,152) 224,243 1,071 (836) - -
Loss in disposal of permanent assets 1,416 15,127 1,991 66,376 22,351 58,428 1,356 50,005
Deferred income tax (27,830) (61,855) 15,680 (1,800) 19,887 (184) 25,599 129,500
Provision (reversal) for tax, civil and labor risks 39,384 60,294 (23,617) (16,241) 25,854 58,030 (23,674) (22,976)
Other provisions (reversals) (618) (16,364) (7,346) 49,582 (16,158) (28,975) (10,073) (941)
Exchange rate variations and interest (2,639) 74,289 (621,228) (686,272) 146,220 281,890 (501,110) (430,086)
Changes in operating assets and liabilities:
Investment in trading securities (799,362) (1,317,844) (434,410) (741,789) (813,192) (1,386,574) (514,935) (1,063,976)
Redemption of trading securities 1,482,796 2,251,341 554,112 653,634 1,522,043 2,423,195 596,135 1,166,385
Investment in available for sale - - - - (37,103) (289,434) - -
Redemption of available for sale - - - - 119,505 424,008 38,533 39,306
Other financial assets and liabilities (8,270) (3,774) 454 15,990 2,373 8,612 454 9,086
Trade accounts receivable 41,596 434,332 162,302 586,305 (190,925) (324,018) 207,140 219,270
Inventories 103,226 158,021 38,862 81,175 238,748 274,981 84,516 172,165
Trade accounts payable 257 (87,789) 39,809 (63,061) 42,712 (79,653) 43,685 (16,343)
Payment of provisions for tax, civil and labor risks (17,057) (30,629) (5,520) (8,394) (17,055) (30,793) (5,524) (8,662)
Interest paid (49,528) (106,586) (71,533) (104,161) (97,338) (304,337) (86,813) (150,285)
Interest in shareholders' equity received 4,004 4,004 - - 4,004 4,004 - -
Payroll and related charges (411,890) 173,518 (185,230) (413,936) (39,228) (146,584) (7,442) (180,933)
Net cash provided by (used) operating activities 463,650 1,654,654 (331,728) (290,611) 1,318,637 1,567,280 92,177 45,519
Investing activities:
Investment in marketable securities - - - (109) - - - (109)
Redemption in marketable securities - - - - 2,251 4,319 - -
Other investments, net (704,869) (704,869) - - - - - -
Cash of merged company - 1,960 - 75,224 - - - -
Additions to property, plant and equipment (108,621) (172,177) (170,399) (247,355) (151,208) (236,125) (175,825) (296,348)
Additions to biological assets (42,175) (81,696) (46,213) (68,074) (99,118) (181,733) (47,757) (94,000)
Proceeds from disposals of property, plant and equipement 1,232 3,504 8,550 9,136 1,154 3,504 7,251 24,669
Additions to intangible (13,714) (14,144) - - (15,006) (15,778) - -
Net cash used in investing activities (868,147) (967,422) (208,062) (231,178) (261,927) (425,813) (216,331) (365,788)
Financing activities:
Proceeds from debt issuance 83,240 260,428 1,116,095 1,492,730 112,127 1,880,442 636,376 1,130,318
Repayment of debt (306,011) (875,356) (617,908) (894,982) (608,746) (2,971,334) (677,627) (1,110,342)
Advance for future capital increases 659,000 - (5,781) (5,736) - - - -
Interest on shareholders' equity paid - (100,000) - (24,783) - (100,000) - (24,783)
Cost of shares issuance (482) (1,285) - - (482) (1,285) - -
Net cash (used in) provided by financing activities 435,747 (716,213) 492,406 567,229 (497,101) (1,192,177) (41,251) (4,807)
Effect of exchange rate variation on cash and cash equivalents 2,213 4,582 (4,990) (5,293) 10,238 (2,922) (85,163) (88,538)
Net increase in cash 33,463 (24,399) (52,374) 40,147 569,847 (53,632) (250,568) (413,614)
Cash at the beginning of the year 165,572 223,434 122,109 29,588 1,274,761 1,898,240 1,070,409 1,233,455
Cash at the end of the year 199,035 199,035 69,735 69,735 1,844,608 1,844,608 819,841 819,841
Cash flow supplementary information
Cash paid during the year for: - - - 35 113 1,377 79 1,508

Page: 36

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BRF - BRASIL FOODS S.A.
STATEMENTS OF VALUE ADDED
For the three and six month period ended June 30, 2010 and June 30, 2009
(Amounts expressed in thousands of Brazilian reais)
Parent company Consolidated
04.01.10 01.01.10 04.01.10 01.01.09 04.01.10 01.01.10 04.01.09 01.01.09
to to to to to to to to
06.30.10 06.30.10 06.30.10 06.30.09 06.30.10 06.30.10 06.30.09 06.30.09
1 - REVENUE 3,052,504 5,829,407 2,790,166 4,289,194 6,270,632 11,986,715 3,151,648 6,153,088
Sales of goods and products 2,992,542 5,722,395 2,672,541 4,171,158 6,171,496 11,854,696 2,994,694 5,894,568
Other (expenses) income (43,813) (53,082) (10,590) (32,932) (37,462) (71,829) (12,599) (33,881)
Revenue related to construction of own assets 107,136 165,476 134,422 159,723 137,956 211,675 175,581 303,111
Allowance for doubtful accounts reversal (provisions) (3,361) (5,382) (6,207) (8,755) (1,358) (7,827) (6,028) (10,710)
2 - RAW MATERIAL ACQUIRED FROM THIRD PARTIES (2,135,133) (4,125,360) (2,107,411) (3,192,743) (4,095,798) (7,915,959) (2,301,932) (4,484,368)
Cost of goods and products sold (1,653,408) (3,280,069) (1,633,641) (2,494,981) (3,106,257) (5,970,732) (1,686,083) (3,338,418)
Material, energy, services of third parties and others (483,562) (860,131) (480,426) (676,393) (998,769) (1,962,032) (627,557) (1,160,374)
Reversal (provision) for losses in inventory 1,837 14,840 6,656 (21,369) 9,228 16,805 11,708 14,424
3 - GROSS VALUE ADDED (1-2) 917,371 1,704,047 682,755 1,096,451 2,174,834 4,070,756 849,716 1,668,720
4 - DEPRECIATION, AMORTIZATION AND DEPLETION (91,847) (171,736) (101,549) (151,994) (214,521) (394,128) (106,258) (217,586)
5 - NET VALUE ADDED (3-4) 825,524 1,532,311 581,206 944,457 1,960,313 3,676,628 743,458 1,451,134
6 - VALUE ADDED RECEIVED FROM THIRD PARTIES 324,002 679,616 648,892 534,485 269,441 663,578 628,468 901,571
Equity interest in income of subsidiaries 155,132 295,737 35,152 (224,243) (1,071) 836 - -
Financial income 168,581 383,551 613,408 758,030 269,879 662,046 628,122 901,259
Other operating income 289 328 332 698 633 696 346 312
7 - ADDED VALUE TO BE DITRIBUTED (5+6) 1,149,526 2,211,927 1,230,098 1,478,942 2,229,754 4,340,206 1,371,926 2,352,705
8 - DISTRIBUTION OF VALUE ADDED: 1,149,526 2,211,927 1,230,098 1,478,942 2,229,754 4,340,206 1,371,926 2,352,705
Payroll 386,728 740,285 340,766 491,705 801,897 1,517,603 360,769 694,760
Salaries 346,193 637,054 279,837 400,199 646,704 1,222,017 296,204 565,861
Benefits 19,733 63,643 41,850 61,428 113,229 215,189 44,992 89,354
Government severance indemnity fund for employees - F.G.T.S 20,802 39,588 19,079 30,078 41,964 80,397 19,573 39,545
Taxes and contributions 313,606 625,456 357,573 517,573 815,401 1,581,616 390,932 865,755
Federal 148,113 291,298 201,372 270,423 501,940 958,225 239,158 562,295
State 164,813 330,493 154,765 244,682 312,709 619,373 150,307 299,989
Municipal 680 3,665 1,436 2,468 752 4,018 1,467 3,471
Capital remuneration from third parties 277,741 613,616 393,918 553,628 442,109 1,009,595 482,292 875,911
Interests 259,243 579,499 379,344 532,488 422,643 971,941 464,586 842,139
Rent 18,498 34,117 14,574 21,140 19,466 37,654 17,706 33,772
Shareholders 171,451 232,570 137,841 (83,964) 170,347 231,392 137,933 (83,721)
Interest on shareholders' equity 53,200 53,200 - - 53,200 53,200 - -
Retained earnings (losses) 118,251 179,370 137,841 (83,964) 118,251 179,370 137,841 (83,964)
Non-controlling interest - - - - (1,104) (1,178) 92 243

Page: 37

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

2. COMPANY’S OPERATIONS

Founded in 1934, in the State of Santa Catarina, BRF – Brasil Foods S.A. (“BRF”) and its subsidiaries (collectively “Company”) is one of Brazil’s largest companies in the food industry. With a focus on raising, producing and slaughtering of poultry, pork and beef, processing and/or sale of fresh meat, processed products, milk and dairy products, pasta, frozen vegetables and soybean derivatives, among which the following are highlighted:

  • Frozen whole chicken and chicken, turkey, pork and beef cuts;
  • Ham products, sausages, bologna, frankfurters and other smoked products;
  • Hamburgers, breaded meat products, kibes and meatballs;
  • Lasagnas, pizzas, vegetables, cheese breads, pies and frozen pastries;
  • Milk, dairy products and desserts;
  • Juices, soy milk and soy juices;
  • Margarine; and
  • Soy meal and refined soy flour, as well as animal feed.

The Company's activities are segregated into two operating segments, domestic and foreign markets.

Currently, the Company operates 44 meat processing plants, 15 milk and dairy products processing plants, 4 pasta processing plants, 1 dessert processing plant, 3 margarine processing plants and 1 soybean crushing plant, all of them located near to the Company’s raw material suppliers or to the main consumer centers. In the foreign market, the Company has subsidiaries in the United Kingdom, Italy, Austria, Hungary, Japan, The Netherlands, Russia, Singapore and United Arab Emirates, Portugal, France, Germany, Turkey, China, Cayman Islands, Venezuela, Uruguay, Chile and 1 cheese processing plant in Argentina.

The wholly-owned subsidiary Plusfood Groep B.V. operates 2 meat processing plants located in the United Kingdom and The Netherlands.

The table below summarizes the direct and indirect ownership interests of the Company, as well as the activities in which these companies are engaged to:

Page: 38

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

2.1. Interest in subsidiaries :

Subsidiary Main activity Country 06.30.10 12.31.09 01.01.09
Perdigão Agroindustrial S.A. (a) Industrialization and commercialization of products Brazil - - 100.00%
PSA Laboratório Veterinário Ltda. Veterinary activities Brazil 88.00% 10.00% 10.00%
Sino dos Alpes Alimentos Ltda. Industrialization and commercialization of products Brazil 99.99% 99.99% 99.99%
PDF Participações Ltda Holding Brazil 1.00% 1.00% 1.00%
Sino dos Alpes Alimentos Ltda Industrialization and commercialization of products Brazil 0.01% 0.01% 0.01%
Vip S.A. Emp.Part.Imobiliárias (b) Commercialization of ow ned real estate Brazil 100.00% 100.00% 100.00%
Estab. Levino Zaccardi y Cia. S.A. Processing of dairy products Argentine 10.00% 10.00% 10.00%
Avipal Nordeste S.A. (c) Raising of poultry for slaughtering Brazil - 100.00% 100.00%
Avipal S.A. Construtora e Incorporadora (d) Construction and real estate marketing Brazil 100.00% 100.00% 100.00%
Avipal Centro-oeste S.A. (d) Industrialization and commercialization of dairy products Brazil 100.00% 100.00% 100.00%
Estab. Levino Zaccardi y Cia. S.A. Processing of dairy products Argentine 90.00% 90.00% 90.00%
UP! Alimentos Ltda Industrialization and commercialization of products Brazil 50.00% 50.00% 50.00%
Perdigão Trading S.A. (d) Holding Brazil 100.00% 100.00% 100.00%
PSA Laboratório Veterinário Ltda Veterinary activities Brazil 12.00% 90.00% 90.00%
PDF Participações Ltda Holding Brazil 99.00% 99.00% 99.00%
Perdigão Export Ltd. (d) Import and export of products Cayman Island 100.00% 100.00% 100.00%
Crossban Holdings GmbH Holding Áustria 100.00% 100.00% 100.00%
Perdigão Europe Ltd (e) Import and export of products Portugal 100.00% 100.00% 100.00%
Perdigão International Ltd Import and export of products Cayman Island 100.00% 100.00% 100.00%
BFF International Ltd Unrestricted activities Cayman Island 100.00% 100.00% 100.00%
Highline International (d) Unrestricted activities Cayman Island 100.00% 100.00% 100.00%
Perdigão UK Ltd Marketing and logistics services United Kingdom 100.00% 100.00% 100.00%
Perdigão France SARL Import and export of products France 100.00% 100.00% 100.00%
Perdigão Holland B.V. Administrative services The Netherlands 100.00% 100.00% 100.00%
Plusfood Groep B.V. Holding The Netherlands 100.00% 100.00% 100.00%
Plusfood B.V. Import and export of products The Netherlands 100.00% 100.00% 100.00%
Plusfood Constanta SRL (f ) Meat processsing Italy - 100.00% 100.00%
Plusfood Finance UK Ltd Financial fund-raising United Kingdom 100.00% 100.00% 100.00%
Fribo Foods Ltd (g) Import and export of products United Kingdom - 100.00% 100.00%
Plusfood France SARL Import and export of products France 100.00% 100.00% 100.00%
Plusfood Iberia SL Distribution of food products Spain 100.00% 100.00% 100.00%
Plusfood Italy SRL Import and export of products Italy 67.00% 67.00% 67.00%
BRF Brasil Foods Japan KK (h) Import and export of products Japan 100.00% 100.00% 100.00%
Brasil Foods PTE Ltd. (i) Marketing and logistics services Singapore 100.00% 100.00% 100.00%
Plusfood Hungary Trade and Service LLC. (j) Import and export of products Hungary 100.00% 100.00% 100.00%
Plusfood UK Ltd Marketing and logistics services United Kingdom 100.00% 100.00% 100.00%
Acheron Beteiligung-sverwaltung GmbH (k) Holding Áustria 100.00% 100.00% 100.00%
Xamol Consul. Serv. Ltda (d) Import and export of products Portugal 100.00% 100.00% 100.00%
HFF Participações S.A. (c) Holding Brazil - 100.00% -
Sadia S.A. (l) Industrialization and commercialization of products Brazil - 33.15% -
Sadia S.A. Industrialization and commercialization of products Brazil 100.00% 66.85% -
Sadia International Ltd. Import and export of products Cayman Island 100.00% 100.00% -
Sadia Uruguay S.A. Import and export of products Uruguay 100.00% 100.00% -
Sadia Chile S.A. Import and export of products Chile 60.00% 60.00% -
Sadia Alimentos S.A. Import and export of products Argentine 95.00% 95.00% -
Sadia U. K. Ltd. Commercialization of real estate and others United Kingdom 100.00% 100.00% -
Concórdia Foods Ltd. Commercialization of real estate and others United Kingdom 100.00% 100.00% -
Sadia Industrial Ltda. Industrialization and commercialization of commodities Brazil 100.00% 100.00% -
Rezende Marketing e Comunicações Ltda. Advertising agency Brazil 0.09% 0.09% -
Big Foods Ind. de Produtos Alimentícios Ltda. Manufacture of bakery products Brazil 100.00% 100.00% -
Rezende Marketing e Comunicações Ltda. Advertising agency Brazil 99.91% 99.91% -
Sadia Overseas Ltd. Financial fund-raising Cayman Island 100.00% 100.00% -
Sadia GmbH Holding Austria 100.00% 100.00% -
Wellax Food Logistics C.P.A.S.U. Lda. Import and export of products Portugal 100.00% 100.00% -
Sadia Foods GmbH Import and export of products Germany 100.00% 100.00% -
Qualy B. V. (k) Import and export of products The Netherlands 100.00% 100.00% -
Sadia Japan KK. Import and export of products Japan 100.00% 100.00% -
Badi Ltd. Import and export of products Arab Emirates 80.00% 80.00% -
Baumhardt Comércio e Participações Ltda. Consulting Brazil 73.94% 73.94% -
Excelsior Alimentos S.A. Slaughterhouse for pork Brazil 25.10% 25.10% -
Excelsior Alimentos S.A. Slaughterhouse for pork Brazil 46.01% 46.01% -
K&S Alimentos S.A. Industrialization and commercialization of products Brazil 49.00% 49.00% -

Page: 39

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

(a) The wholly-owned subsidiary Perdigão Agroindustrial S.A. was merged into the parent company as of March 9, 2009;

(b) The name of the wholly-owned subsidiary Avipal S.A. Alimentos was changed to Vip S.A. Empreendimentos e Participações Imobiliárias on January 4, 2010;

(c) Wholly-owned subsidiaries merged into the parent company on March 31, 2010;

(d) Dormant subsidiaries;

(e) The name of the wholly-owned subsidiary Perdix was changed to Perdigão Europe on March 18, 2009;

(f) Disposal of ownership interest on March 31 , 2010;

(g) The name of the wholly-owned subsidiary Plusfood Wrexham was changed to Fribo Foods Ltd. on April 1, 2009;

(h) The name of the wholly-owned subsidiary Perdigão Nihon K.K. was changed to Brasil Foods Japan K.K. on November 1, 2010;

(i) The name of the wholly-owned subsidiary Perdigão Asia PTE Ltd. was changed to Brasil Foods PTE Ltd. in August 2010;

(j) The name of the wholly-owned subsidiary Plusfood Hungary Kft. was changed to Plusfood Hungary Trade and Service LLC;

(k) The wholly-owned subsidiary Acheron Beteiligung-sverwaltung GmbH owns 100 direct subsidiaries in Madeira Island, Portugal, with an investment of R$1,273, and the wholly-owned subsidiary Qualy B.V. owns 48 subsidiaries in the Netherlands, and the amount of this investment, as of June 30, 2010, is represented by a net capital deficiency of R$7,197, the purpose of these two subsidiaries is to operate in the European market to increase the Company’s share of this market, which is regulated by a system of poultry and turkey import quotas; and

(l) Due to the merger of HFF on March 31, 2010, on this date Sadia became directly wholly-owned subsidiary of BRF-Brasil Foods S.A.

2.2. Corporate restructuring

The Company has been following its sustainable growth plan since mid 2005, which is based on the acquisition of various companies and start of new businesses.

As a result of these acquisitions, the Company grew and diversified its businesses, increasing its market share in the poultry and pork markets and entering the dairy, margarine and beef markets.

The companies acquired were:

Page: 4 0

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Company Activity Acquisition Year Status
Sadia Meat 2009 Wholly-owned subsidiary
HFF Participações Holding 2009 Merged on 03.31.10
Eleva Alimentos Dairy/meat 2008 Merged on 04.30.08
Cotochés Dairy 2008 Merged on 12.31.08
Plusfood Meat 2008 Wholly-owned subsidiary
Batávia S.A. Dairy 2006/2007 Merged on 12.31.08
Paraíso Agroindustrial Meat 2007 Merged on 08.01.07
Ava Comércio e Representação Margarines 2007 Merged on 08.01.07
Sino dos Alpes Meat 2007 Wholly-owned subsidiary
Mary Loize Meat 2005 Merged on 12.31.08
Incubatório Paraíso Meat 2005 Merged on 07.03.06
Perdigão Agroindustrial Meat - Merged on 03.09.09

Within this growth process, the Company carried out comprehensive corporate and business restructuring actions, aimed at maintaining the sustainability of its businesses by streamlining its corporate structure, reducing operating, tax and finance costs, as well as by reorganizing its operating activities.

As a result of the restructuring process the following changes occurred in the period of six months ended on June 30, 2010:

a) On February 26, 2010, the wholly-owned subsidiaries HFF Participações S.A. and Avipal Nordeste S.A. were merged into the BRF;

b) On March 31, 2010, the interest in the wholly-owned subsidiary Plusfood Constanta SRL was for EUR 10 thousand.

The Company has an advanced distribution system and uses 38 distribution centers, delivering its products to supermarkets, retail stores, wholesalers, food service stores and other institutional customers of the domestic market and exporting to more than 145 countries.

BRF has a large number of brands, the principal of which are: Batavo, Claybon, Chester®, Confiança, Delicata, Doriana, Elegê, Fazenda, Nabrasa, Perdigão, Perdix, in addition to licensed brands such as Turma da Mônica. The main brands of the subsidiary Sadia are: Fiesta, Hot Pocket, Miss Daisy, Nuggets, Qualy, Rezende, Sadia, Speciale Sadia, Texas and Wilson.

In April 2006, the Company’s shares were listed on the Novo Mercado corporate governance (“New Market of the São Paulo Stock Exchange”).

The Extraordinary Shareholders' Meeting held on July 8, 2009 approved that the shares issued by the Company started to be traded on the São Paulo Securities, Futures and Commodities Exchange (“BM&FBOVESPA”) under the new ticker BRFS3 and on the New York Stock Exchange (“NYSE”) under the new ticker BRFS, which replaced the former tickers PRGA3 and PDA, respectively.

Page: 41

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

3. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

3.1. Consolidation : includes the BRF’s financial statements and the financial statements of the direct and indirect held subsidiaries where BRF has control. All transactions and balances between BRF and its subsidiaries have been eliminated upon consolidation, as well as the unrealized profits or losses arising from transactions between the Company and its subsidiaries, and the related charges and taxes. Non-controlling interest is presented separately.

In the preparation of the consolidated quarterly information, the Company applied CVM Deliberation No. 534/08, which approved the technical pronouncement CPC 02, addressing the Effects of Changes in Foreign Exchange Rates and Translation of Financial Statements. Pursuant to this Resolution, the Company must apply the following criteria for the consolidation of foreign subsidiaries:

· Functional currency : the quarterly information of each subsidiary included in the Company’s consolidated quarterly information are prepared using the currency of the main economic environment where it operates. The foreign subsidiaries adopted the real as their functional currency, except for the subsidiary Plusfood Groep B.V. and its subsidiaries, which adopted the Euro as their functional currency;

· Investments : investments in affiliates are accounted for under the equity method. The quarterly information of foreign subsidiaries are translated into Brazilian Reais in accordance with their functional currency using the following criteria:

Functional currency - Euro

· Assets and liabilities are translated at the exchange rate at the end of the period.

· Statement of income accounts are translated at the exchange rate obtained from the monthly average rate of each month.

Page: 42

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

· The cumulative effects of gains or losses upon translation are directly recognized in the shareholders’ equity.

Functional currency – Brazilian reais

· Non-monetary assets and liabilities are translated at the historical rate of the transaction.

· Monetary assets and liabilities are translated at the exchange rate effective at the end of the period.

· Statement of income accounts are translated at the exchange rate obtained from the monthly average rate of each month.

· The cumulative effects of gains or losses upon translation are directly recognized in the statement of income.

Pursuant to CVM Instruction No. 608/09, the subsidiary Sadia consolidated the financial statements of a foreign investment fund named Concórdia Foreign Investment Fund Class A. Sadia is the sole unit holder of this fund (exclusive fund). This investment fund has the specific purpose of centralizing the portfolio of investments abroad, outsourcing administrative functions.

The accounting practices have been consistently applied in all subsidiaries included in the consolidated quarterly information and are consistent with the practices adopted by the parent company. The quarterly information of the subsidiaries has been prepared for the same reporting date as the parent company.

3.2. Business combinations : business combinations are accounted for using the acquisition method. The cost of an acquisition is the sum of the consideration transferred, valued based on the fair value at acquisition date, and the amount of any non-controlling interests in the acquiree. For each business combination, the Company recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. Costs directly attributable to the acquisition must be accounted for as an expense when incurred.

When acquiring a business, Management evaluate the assets acquired and the liabilities assumed in order to classify and allocate them pursuant to the terms of the agreement, economic circumstances and the conditions at acquisition date.

Page: 43

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Goodwill is initially measured as the excess of the consideration transferred over the fair value of the net assets acquired (net assets identified and liabilities assumed). If the consideration is lower than the fair value of the net assets acquired, the difference is recognized as a gain in the statement of income.

After initial recognition, goodwill is measured at cost, net of any accumulated impairment losses. For purposes of impairment testing, the goodwill acquired in a business combination, as from the acquisition date, is allocated to each of the Company’s cash generating units expected to be benefit from the synergies of the combination, regardless of whether other assets or liabilities of the acquirer are attributed to these units.

3.3. Segment information : an operating segment is a Company’s component that carries out business activities from which it can obtain revenues and incur expenses. The operating segments reflect how the Company’s management reviews financial information to make decisions and for which individual financial information is available. The Company’s management identified two segments operations for disclosure, the domestic and the foreign markets, which meet the quantitative and qualitative disclosure parameters. The segments identified for disclosure represent geographical sales areas, and, accordingly, information according to the characteristics of the products is also presented, based on their nature, as follows: meat and dairy, prepared and processed products. Products of other nature were grouped as “other”, since they do not meet the quantitative parameters, nor do they have qualitative importance to the periods presented.

3.4. Cash and cash equivalents : includes cash on hand, bank deposits and highly liquid investments in fixed-income funds and/or securities with maturities, upon acquisition, of 90 days or less, which are readily convertible into known amounts of cash and subject to immaterial risk of change in value. The investments classified in this group, due to their nature, are measured at fair value through the statement of income.

3.5. Financial instruments: Financial assets and liabilities are classified based on the purpose for which they were acquired, and their classification is determined at the initial recognition of the financial instruments. Financial assets and liabilities include: financial investments, loans, receivables, derivatives and other.

3.5.1. Financial investments are financial assets that comprise public and private fixed-income securities, classified and recorded based on the purpose for which they were acquired, in accordance with the following:

Page: 44

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

(a) Trading securities: acquired for sale or repurchase in the short term, are initially recorded at fair value plus its variations, with a corresponding entry directly recorded in the statement of income for the year within interest income or expense;

(b) Held to maturity: when the Company has the intention and financial ability to hold the instrument to maturity, the investments are recorded at cost, plus interest, inflation adjustment and exchange rate changes, when applicable, and recognized in the statement of income when incurred, within interest income or expense; and

(c) Available for sale: this category is for all the financial assets that are not classified any of the categories above, which are measured at fair value, with variations recorded in the shareholders’ equity within other comprehensive income, net of taxes. Interest, inflation adjustments and exchange rate changes, when applicable, are recognized in the statement of income when incurred within interest income or expense.

3.5.2. Derivatives measured at fair value : these are derivatives actively traded on organized markets, and their fair value is determined based on the amounts quoted on the market at the quarterly information date. These financial instruments are designated at initial recognition, classified as other financial assets and/or liabilities, with a corresponding entry in the statement of income within ‘Finance income or costs’ or ‘Cash flow hedge’, which are recorded in equity net of taxes.

3.5.3. Hedge transactions : derivatives used to hedge exposures to risks or change the characteristics of financial assets and liabilities, unrecognized firm commitments, highly probable transactions or net investments in transactions abroad, and which: (i) are highly correlated as regards changes in their fair value in relation to the fair value of the hedged item, both at inception and throughout the life of the contract (effectiveness from 80% to 125%); (ii) are supported by documents that identify the transaction, the hedged risk, the risk management process and the methodology used to assess effectiveness; and (iii) are considered as effective in the mitigation of the risk associated with the hedged exposure.

The accounting follows CVM Deliberation No. 604/09, which allows the application of the hedge accounting methodology with the effects of measurement at fair value recognized in equity and their realization in the statement of income under a caption corresponding to the hedged item.

Page: 45

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The Company elected to apply this methodology to its hedge transactions that meet the criteria described above.

3.5.4. Loans and receivables : these are financial assets with fixed or determinable payments which are not quoted on an active market. Such assets are initially recognized at fair value plus any attributable transaction costs. After initial recognition, loans and receivables are measured at amortized cost under the effective interest rate method, less any impairment losses.

3.6. Adjustment to present value : the Company and its subsidiaries measure the adjustment to present value of outstanding balances of trade receivables, other rights, trade payables, social obligations and other long-term obligations. The Company adopts the weighted average of the cost of funding on the domestic and foreign markets to determine the adjustment to present value to the assets and liabilities previously mentioned, which corresponds to 6.20% p.a. (6.13% p.a. as of December 31, 2009). The subsidiary Sadia calculated and recorded the adjustment to present value of trade receivables based on the rate used in each transaction, which corresponds to 4.5% per month, and for trade payables it used 100% of the interbank certificate of deposit (“CDI”) that on June 30, 2010, corresponded to 8.95% p.a.

3.7. Trade receivables and other receivables : are recorded at the invoiced amount and adjusted to present value, when applicable, net of estimated losses on doubtful receivables.

The Company adopts procedures and analyses to establish credit limits and generally does not require collateral from customers. In the event of default, collection attempts are made, which includes direct contact with customers and collection through third parties. Should these efforts not prove successful, court measures are considered and the notes are reclassified to non-current at the same time an estimated loss on doubtful receivables is recorded.

3.8. Inventories : are stated at average cost, not exceeding market value or net realizable value. The cost of finished products includes raw materials, labor, cost of production, transport and storage, all of which are related to making the products ready for sale. Provisions for obsolescence, adjustments to net realizable value, impaired items and slow-moving inventories are recorded when necessary. Production losses are recorded and are an integral part of the production cost of the respective month, whereas, unusual losses, if any, are recorded directly as an expense for the period.

Page: 46

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

3.9. Biological assets : pursuant to CVM Deliberation No. 596/09, agricultural activity is the management of the biological transformation of biological assets (living animals and/or plants) for sale, into agricultural produce, or additional biological assets. The Company classifies living poultry and pigs as biological assets.

The Company recognizes biological assets when it controls these assets as a result of a past event and it is probable that future economic benefits associated with these assets will flow to the Company and fair value can be reliably estimated.

Pursuant to CVM Deliberation No. 596/09, biological assets should be measured at fair value less selling expenses at the time they are initially recognized and at the end of each accrual period, except for cases in which fair value cannot be reliably estimated.

In Management’s opinion, the fair value of biological assets is substantially represented by cost, mainly due to the short life cycle of the animals and the fact that a significant share of the profits from our products arises from the manufacturing process rather than from the obtaining of fresh meat (raw material/ slaughter readiness). This opinion is supported by a fair value appraisal report prepared by an independent expert, which calculated an negligible difference between the two methodologies. As a consequence, Management continued to record biological assets at cost.

3.10. Assets held for sale : the assets included in this subgroup are those identified as unusable by the Company and whose sale has been authorized by Management; accordingly, there is a firm commitment to find a purchaser and conclude the sale are readily available at a reasonable price and unlikely changes in the sell plan . These assets are measured at carrying amount or fair value, whichever is lower, net of selling costs and are not depreciated or amortized.

3.11. Property, plant and equipment : stated at cost of acquisition or construction, less accumulated depreciation and impairment losses, when applicable. The costs of capitalized borrowings are recorded as an integral part of construction in progress, pursuant to CVM Deliberation No. 577/09.

Depreciation is recognized based on the estimated economic useful life of each asset on the straight-line basis. The estimated useful life, residual values and depreciation methods are annually reviewed and the effects of any changes in estimates are accounted for prospectively. Land is not depreciated.

Page: 47

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

CVM Deliberation No. 527/07 requires an analysis of the recoverability of all the items included in this subgroup whenever there is an indication of impairment, since no item should remain recorded at an amount that exceeds realizable value, either by sale or use. The Company performed a recoverability test in the last quarter of each fiscal year. In the quarter Management has not identified any impairment events that could require an anticipation of impairment analysis.

Gains and losses on disposals are calculated by comparing the sales value with the residual book value and recognized in the income statement.

3.12. Intangibles : are identifiable nonphysical assets, under the Company’s control and which generate future economic benefits.

Intangible assets acquired are measured at cost at the time they are initially recognized. The cost of intangible assets acquired in a business combination corresponds to the fair value at acquisition date. After initial recognition, intangible assets are stated at cost less accumulated amortization and impairment losses, when applicable. Internally-generated intangible assets, excluding development costs, are not capitalized and expenditure is recognized in the statement of income for the period in which it was incurred.

The useful life of intangible assets is assessed as finite or indefinite.

Intangible assets with a finite life are amortized over the economic useful life and reviewed for impairment whenever there is an indication of a reduction in the economic value of the asset. The amortization period and method for an intangible asset with a finite useful life are reviewed at least at the end of each fiscal year. The amortization of intangible assets with a finite useful life is recognized in the statement of income as an expense consistently with the use of the intangible asset.

Intangible assets with an indefinite useful life are not amortized, but are annually tested for impairment on an individual basis or at the cash generating unit level. The Company records in intangible assets goodwill balance.

Goodwill recoverability was tested in the last quarter of each fiscal year. During the quarter Management has not identified any events that could require the anticipation of the impairment analysis.

3.13. Income taxes and social contributions: in Brazil, these comprise Income Tax (“IRPJ”) and Social Contribution (“CSLL”), which are monthly calculated on taxable income, at the rate of 15% plus a 10% surtax for IRPJ and of 9% for CSLL, considering the offset of tax loss carryforwards, up to the limit of 30% of taxable income.

Page: 48

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The income from foreign subsidiaries is subject to taxation in their home countries, pursuant to the local tax rates and standards.

Deferred taxes represent credits and debits on IRPJ and CSLL tax losses, as well as temporary differences between the tax basis and the carrying amount. Deferred income tax and social contribution assets and liabilities are classified as non-current, as required by CVM Deliberation No. 595/09; when it is probable that these credits will not be used in the future, a provision is established for non-recovery of deferred taxes.

Deferred tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and they relate to income taxes levied by the same tax authority on the same taxable entity. In the consolidated financial statements, the Company’s tax assets and liabilities can be offset against the tax assets and liabilities of the subsidiaries if, and only if, these entities have a legally enforceable right to make or receive a single net payment and intend to make or receive this net payment, or recover the assets and settle the liabilities simultaneously; therefore, for presentation purposes, the balances of tax assets and tax liabilities are being disclosed separately.

3.14. Accounts payable and trade accounts payable : are initially recognized at fair value and subsequently increased, if applicable, with the accrued charges, monetary and exchange variations incurred until the closing dates of the quarterly information.

3.15. Provision for tax, civil and labor risks and contingent liabilities : provisions are established when the Company has a present obligation (legal or not formalized) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and the amount of the obligation can be reliably estimated.

The Company is a party to various lawsuits and administrative proceedings. The assessment of the likelihood of an unfavorable outcome in these lawsuits and proceedings includes the analysis of the evidence available, the hierarchy of the laws, available former court decisions, as well as the most recent court decisions and their importance to the Brazilian legal system, as well as the opinion of external legal counsel. The provisions are reviewed and adjusted to reflect changes in the circumstances, such as the applicable statute of limitation, conclusions of tax inspections or additional exposures identified based on new matters or court decisions.

Page: 49

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

A contingent liability recognized in a business combination is initially measured at fair value and subsequently measured at the higher of:

· the amount that would be recognized in accordance with the accounting policy for the provisions above (CVM Deliberation No. 594/09); or

· the amount initially recognized less, if appropriate, cumulative amortization recognized in accordance with the revenue recognition policy (CVM Deliberation No. 597/09).

As a result of the business combination with Sadia, the Company recognized contingent liabilities related to tax, civil and labor matters, as described in notes 6 and 25.

Costs incurred with disposal of assets are accrued based on the present value of the costs expected to settle the obligation using estimated cash flows, and are recognized as an integral part of the corresponding asset, or as a production cost, when incurred.

3.16. Leases : lease transactions in which the risks and rewards of ownership are substantially transferred are classified as finance leases. When there is no significant transfer of the risks and rewards of ownership, lease transactions are classified as operating leases.

Finance lease agreements are recognized in property, plant and equipment and in liabilities at the lower of the present value of the minimum mandatory installments of the agreement and the fair value of the asset, including, when applicable, the initial direct costs incurred in the transaction. The amounts recorded in property, plant and equipment are depreciated and the underlying interest is recorded in the statement of income in accordance with the term of the lease agreement.

Operating lease agreements are recognized as expenses throughout the lease agreement term.

3.17. Share based payment : the Company provides share based payment for its executives, which are settled with Company shares. The Company adopts the provisions of CVM Deliberation No. 562/08, recognizing as an expense, on the straight-line basis, the fair value of the options granted, over the length of service required by the plan, with a corresponding entry to equity and/or liabilities. The fair value of the options is updated on a quarterly basis, in accordance with the assumptions available on the market.

Page: 50

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

3.18. Actuarial assets and liabilities on employee benefits: The Company and its subsidiaries recognize actuarial assets and liabilities related to employee benefits (medical plan, fine F.G.T.S. and compensation for termination and retirement) in accordance with the criteria provided for in CVM Deliberation No. 600/09. Actuarial gains and losses are recognized in other operating income based on the actuarial report.

The contributions made by the sponsors are recognized as an expense for the period.

The plan assets are the disposal of the Company’s creditors and cannot be directly paid to the Company. Fair value is based on information on the market price and, in the case of quoted securities, on the purchase price disclosed. The value of any defined benefit asset recognized is restricted to the sum of any past service costs not yet recognized and the fair value of any economic benefit available in the form of reductions in the plan’s future employer contributions.

3.19. Capital : common shares are classified as equity. Additional costs directly attributable to issue of shares are recognized as a deduction from equity, after any tax effects.

3.20. Repurchase of shares (treasury shares): when the capital recognized as equity is repurchased, the amount of compensation paid, which includes directly attributable costs, net of any tax effects, is recognized as a deduction from equity. The repurchased shares are classified as treasury shares and are presented as a deduction from total equity. When treasury shares are subsequently sold or reissued, the value received is recognized as an increase in shareholders' equity and surplus or deficit arising is transferred to retained earnings .

3.21. Earnings per share: basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share are calculated by dividing the profit attributable to the holders of ordinary shares of the parent company by the weighted average number of ordinary shares in issue during the year, plus the weighted average number of ordinary shares that would be issued on conversion of all potentially dilutive ordinary shares.

Page: 5 1

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

3.22. Determination of income : results from operations are recorded on the accrual basis.

3.23. Revenues : are recognized when the ownership and risks inherent to the product are substantially transferred to the customer, when the sales price is fixed and determinable, when there is evidence of a sales contract and when collection is reasonably assured. Revenues are not recognized when there is substantial uncertainty as to their realization.

Revenue is presented net of sales taxes, returns, rebates and discounts in the consolidated financial statements and also net of eliminations of sales between BRF and its subsidiaries.

In addition, the Company and its subsidiaries have incentive programs and sales discounts, which are accounted for as deductions from sales or selling expenses, based on their nature. These programs include discounts to customers for a good sales performance based on volumes and marketing actions carried out at the sales points.

3.24. Employee and management profit sharing: employees are entitled to profit sharing based on certain targets agreed upon on an annual basis, whereas managers are entitled to profit sharing based on the provisions of the by-laws. Profit sharing is proposed by the Board of Directors and approved by the stockholders. The profit sharing amount is recognized in the statement of income for the period in which the targets are attained.

3.25. Research and development : expenditures on research activities, undertaken with the opportunity to gain knowledge and understanding of science or technology, are recognized in income as incurred. Development activities are aimed producing new or significantly improved plans or projects. The development costs are capitalized only if development costs can be reliably measured, if the product or process is technically and commercially viable if the future economic benefits are probable, and if the Company has the intention and the resources to complete the development and use or sell the asset. The expenditures capitalized include the cost of materials, labor, manufacturing costs that are directly attributable to preparing the asset for its intended use, other development expenditures are recognized in income as incurred.

Page: 5 2

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The capitalized development expenditures are measured at cost less accumulated amortization and loss on the impairment.

3.26. Financial revenues : include interest earnings on amounts invested (including available for sale financial assets), dividend income (except for dividends received from equity investees evaluated by the Company), gains on disposal of available for sale financial assets, changes in fair value of financial assets measured at fair value through income and gains on hedging instruments that are recognized in income. Interest income is recognized in earnings through the effective interest method. The dividend income is recognized in the statement of income on the date that the Company's right to receive payment is established. The distributions received from investees that are recorded under equity reduce the value of the investment .

3.27. Subsidies and tax incentives: the Company has Value-added Tax on Sales and Services (ICMS) benefits for investments mainly granted by the governments of the states of Santa Catarina, Goiás, Pernambuco, Mato Grosso, São Paulo, Minas Gerais, Bahia and the Federal District. These tax incentives are directly linked to the operation of production units, creation of jobs and social and economic development in the respective states, and are directly recorded in the statement of income. If the tax incentives generate future obligations, these obligations are recognized at their initial fair value and recorded in the statement of income as fulfilled, with a corresponding entry to the tax benefits received.

The subsidiary Sadia received as a donation a plot of land located in the state of Pernambuco, whose fair value as of June 30, 2010 and December 31, 2009 is R$4,139. The donation is conditioned on the construction of a production unit, which will create jobs and contribute to the economic and social development of the region. In compliance with CVM Deliberation No. 555/08, the fair value of the land, obtained through appraisals carried out by real estate agencies in the region, was recognized in PP&E with a corresponding entry to long-term obligations. The value of the land will be recognized in the statement of income as the production unit is depreciated.

3.28. Dividends and interest on capital : the proposal for payment of dividends and interest on capital made by the Company’s Management which is within the portion equivalent to the mandatory minimum dividend is recorded in current liabilities, for it is regarded as a legal obligation provided for in the by-laws; the dividends that exceed the mandatory minimum dividend, declared by Management before the end of the accounting period covered by the financial statements, not yet approved by the stockholders, is recorded as additional dividend proposed in shareholders’ equity.

Page: 5 3

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

For quarterly information presentation purposes, interest on capital is stated as an allocation of income directly in equity.

3.29. Translation of foreign-currency denominated assets and liabilities: As mentioned in item 3.1 above, the balances of assets and liabilities of foreign subsidiaries are translated into Brazilian Reais using the exchange rates in effect at the balance sheet date and statement of income accounts are translated at the monthly rates in effect.

The exchange rates in Brazilian Reais in effect at the date of the balance sheets translated were as follows:

Final rate 06.30.10 06.30.09 12.31.09 01.01.09
U.S. Dollar (US$) 1.8015 1.9516 1.7412 2.3370
Euro (€) 2.2043 2.7399 2.5073 3.2382
Pound (£) 2.6929 3.2129 2.8241 3.4151
Average rates
U.S. Dollar (US$) 1.7965 1.9576 1.9935 1.8375
Euro (€) 2.3832 2.7427 2.7631 2.6698
Pound (£) 2.7387 3.2048 3.1092 3.3308

3.30. Accounting judgments, estimates and assumptions : As mentioned in note 1, in the process of applying the Company’s accounting policies, Management made the following judgments which have a material impact on the amounts recognized in the quarterly information:

· impairment of non-financial assets;

· share-based payment transactions;

· loss on the reduction of recoverable value of taxes;

· retirement benefits;

· measurement at fair value of items related to business combinations;

· fair value of financial instruments;

· provision for tax, civil and labor risks;

· estimated losses on doubtful receivables;

· biological assets; and

· useful lives of property, plant and equipment.

The Company reviews estimates and underlying assumptions used in its accounting estimates at least on a quarterly basis. Revisions to accounting estimates are recognized in the quarterly information in the period in which the estimates are revised.

Page: 5 4

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

3.31. Statement of added value : the Company prepared statements of value added (“DVA”) and consolidated in accordance with CVM Deliberation No. 557/08, which are submitted as part of the quarterly information in accordance with BR GAAP. It represents for IFRS additional financial information.

4. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

4.1. Overview

In the normal course of its business, the Company is exposed to market risks related mainly to the fluctuation of interest rates, foreign exchange rates and commodity prices. The Company utilizes hedging instruments to mitigate its exposure to these risks, based on a Financial Risk Management Policy (“Risk Policy”) under the management of the Financial Risk Management Committee, Board of Executive Officers and Board of Directors.

The Company has policies and procedures for the administration of such exposures and can use hedging instruments, provided they are approved by the Board of Directors, to reduce the impacts of these risks. Such policies and procedures include the monitoring of the levels of exposure to each market risk and its measurement, including an analysis based on the accounting exposure and forecast of future cash flows, besides setting limits for decision making. All the instruments used by the Company are aimed at: (i) protection of the foreign exchange exposure of its debt and cash flow; and (ii) exposure of interest rates.

The Board of Directors plays a crucial role in the financial risk management structure as responsible for approval of the Risk Policy prepared by the Financial Risk Management Committee and for the supervision of the performance of this policy, verifying if the established limits are being respected. Moreover, the Board of Directors defines the limits of tolerance of the different risks identified as acceptable for the Company on behalf of its shareholders.

The Board of Executive Officers is in charge of the evaluation of the Company’s positioning for each risk identified, according to the guidelines enacted by the Board of Directors. In addition, it is responsible for the approval of: (i) the action plans defined for the alignment of risks with the defined tolerance; (ii) the performance indicators to be used in risk management; (iii) the overall limits; and (iv) the evaluation of suggestions for improvements in the policy.

Page: 5 5

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The Financial Risk Management Committee is in charge of the execution of the Risk Policy. It is this committee that supervises the risk management process, plans and verifies the impact of the decisions implemented, evaluates and approves hedging alternatives, monitors and keeps track of the levels of exposure and the fulfillment of the policy, keeps track of the performance of hedging operations through reports and evaluates the scenarios to be applied in the operations, in the cash flow and in the indebtedness of the Company, in conformity with the established policy.

In the Risk Policy the Company determines the strategies to be adopted, and the Management contracts hedging instruments that are approved within the delegation of authority levels. The Board of Directors, Board of Executive Officers and Financial Risk Committee have different levels of authority where each one acts within the limits pre-established in this Policy.

The Policy does not authorize the Company to contract leveraged transactions in derivative markets, and determines that individual hedge operations (notional) must be limited to 2.5% of the Company’s shareholders’ equity.

The inclusion and updating of transactions are recorded in the Company’s operating systems, with proper segregation of duties in the reconciliations with the counterparties, with validation by the back-office and daily monitoring by the financial area.

Given the objective of utilizing hedging transactions to mitigate the risks and the uncertainties to which the Company is exposed, the results obtained in the six months period ended on June 30, 2010 met the established objectives.

As allowed by CVM Deliberation No. 604/09, the Company applies hedge accounting rules to its derivative instruments classified as cash flow hedge, as determined in its Risk Policy. The cash flow hedge consists of hedging exposure against variability of the cash flow that (i) is attributable to a particular risk associated with a recognized asset or liability, or (ii) a highly probable predicted transaction, and (iii) could affect profit and loss.

One of the purposes of the Risk Policy is to determine parameters of use of financial instruments, including derivatives, which are designed to protect the operating and financial assets and liabilities, exposed to foreign exchange rate, and commodity price variation. The finance department is responsible for the fulfillment of the Risk Policy.

Page: 5 6

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

4.2. Interest rate risk management

The interest rate risk is the risk of the Company suffering economic losses due to adverse changes in the interest rates, which may be caused by factors related to economic crises and/or alteration of monetary policy in the domestic and foreign market, etc. This exposure refers mainly to changes in the market interest rates that affect Company liabilities and assets indexed by the LIBOR, TJLP (long-term interest rate), UMBNDES (monetary unit of the Brazilian Development Bank) or CDI (interbank deposit certificate) rate, besides possible derivative transactions involving fixed rate positions against one of the above mentioned indexes that could give rise to unrealized and/or realized losses originated by the determination of the fair market value (mark to market).

The Company’s Risk Policy does not restrict exposure to the different interest rates and does not establish limits between fixed and floating rates either.

The Company continually monitors market interest rates, aiming to evaluate the potential need to enter in contracts to serve as hedge against the volatility of these rates. These transactions are basically characterized by changing from floating rate to fixed rate. Such transactions were designated by the Company as cash flow hedge.

The Company seeks to maintain a stable correlation between its current and non-current term indebtedness, maintaining a higher portion in the non-current term. Moreover, the Company has pre and post fixed rates indebtedness that in aggregate also reduce the risk exposure.

The Company’s indebtedness is essentially tied to the LIBOR, fixed coupon (“R$ and USD”), TJLP and UMBNDES rates. In the event of adverse changes in the market that result in LIBOR hikes, the cost of the floating indebtedness rises and on the other hand, the cost of the fixed indebtedness decreases in relative terms. The same consideration is also applicable to the TJLP.

With regards to the Company's cash and equivalents, the main index is the CDI for investments in the domestic market and fixed coupon (“USD”) for investments in the foreign market. In the event of a CDI increase, impacts become favorable, while in the event of a CDI decrease, results become unfavorable.

The table below summarizes the changes in the interest rates and the impacts for the Company.

Page: 5 7

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Index Interest fixed rate risk — Exposure Variation Impact Index Interest floating rate risk — Exposure Variation Impact
CDI Cash and cash equivalents + - CDI Cash and cash equivalents + +
CDI Cash and cash equivalents - + CDI Cash and cash equivalents - -
CDI Liabilities + + CDI Liabilities + -
CDI Liabilities - - CDI Liabilities - +
LIBOR/Cupom USD Cash and cash equivalents + - TJLP Liabilities + -
LIBOR/Cupom USD Cash and cash equivalents - + TJLP Liabilities - +
LIBOR/Cupom USD Liabilities + + LIBOR Liabilities + -
LIBOR/Cupom USD Liabilities - - LIBOR Liabilities - +

The results obtained in relation to the objectives proposed by the Company concerning exposure to interest rates were attained in the three and six month period ended on June 30, 2010.

4.3. Foreign exchange risk management

Foreign exchange risk is the risk of fluctuations of foreign currency exchange rates causing the Company to incur unexpected losses, leading to a reduction of the values of assets or an increase of the amounts of obligations. The main exposures, to which the Company is subject, as regards foreign exchange variations, refer to the fluctuation of the US Dollar and also of the Euro and of the British Pound in relation to the Brazilian Real.

The aim of the Company’s Risk Policy is the prevention from excessive exposure to the risks of foreign exchange variations by balancing its assets not denominated in Brazilian Reais against its obligations also not denominated in Brazilian reais, thus protecting the Company’s balance sheet. For this purpose, the Company can make use of over-the-counter transactions (swaps) and transactions on the futures exchange.

The subsidiary Sadia does not have outstanding derivative contracts as of June 30, 2010.

4.3.1. Breakdown of the balances of exposure in foreign currency

Foreign currency denominated assets and liabilities are shown as follows:

Page: 5 8

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Cash and cash equivalents and marketable securities 167,501 185,052 11,010 2,093,247 2,234,194 1,205,219
Trade accounts receivable - third parties 70,379 35,577 27,788 1,216,962 666,310 708,491
Accounts receivable from subsidiaries 300,053 717,925 1,238 - - -
Swap agreements - (78,803) (24,000) - (78,803) 826,450
Dollar futures agreements - 122,751 - - 122,751 327,529
Forward Contracts (NDF) (a) - - - - (211,268) -
Loans and financing (995,377) (1,309,416) (1,078,902) (4,511,220) (4,484,361) (4,072,604)
Pre-payment exports designated as hedge accounting 921,968 - - 921,968 - -
Other operating assets and liabilities, net (b) - (979,784) (743,638) - (5,091) 154,732
464,524 (1,306,698) (1,806,504) (279,043) (1,756,268) (850,183)
Foreign exchange exposure in R$ 464,524 (1,306,698) (1,806,504) (279,043) (1,756,268) (850,183)
Foreign exchange exposure in US$ 257,854 (750,458) (773,001) (154,895) (1,008,654) (363,792)

(a) Offshore non-deliverable forwards (“NDFs”) not designated as hedge accounting, impacting financial result and not shareholders' equity.

(b) Basically refers to the acquisition of inventories and suppliers.

The Company's total foreign exchange exposure is US$154,895 and is within the limit established by the Risk Policy.

Moreover, the Company’s Risk Policy aims to protect the operating revenues and costs that involve operations resulting from the business activity, such as estimates of exports and purchases of raw materials. For this purpose, the Company uses hedge instruments, approved in the Risk Policy, focused mainly on the protection of its foreign currency denominated projected cash flow.

On June 30, 2010, the Company had non-deliverable forward (“NDF”) operations in the amount of US$510,000, and export prepayments (“PPEs”) in the amount of US$511.777 designated as hedge accounting (unrealized financial income/expenses impacting shareholders’ equity and affecting the statement of income when realized). According to the deliberation of Financial Risk Management Committee and the Board of Directors, during the first quarter of 2010 the Company has started to sell Euro and Pound in future markets with the objective to protect its cash flow. On June 30, 2010, the Company had the position of EUR 91,000 and GBP 29,300.

With the intention of performing active management and following the Risk Policy, the Company performs daily monitoring, through reports issued by the financial area and validated by the back-office area, on cash flow needs and foreign exchange exposure.

Page: 5 9

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

4.3.2. Breakdown of the balances of derivative financial instruments

The consolidated positions of outstanding derivatives on June 30, 2010; December 31, 2009 and January 1, 2009 are as follows:

BR GAAP and IFRS
Consolidated 06.30.10
Reference
Subject to value Market
Instrument hedge Maturity Receivable Payable (notional) value (1)
NDF Exchange rate From 07/2010 to 05/2011 R$ (Pre - 10.67%) US$ (E.V.) 900,750 18,259
NDF Exchange rate From 07/2010 to 02/2011 R$ (Pre - 12.33%) EUR (E.V.) 200,591 15,701
NDF Exchange rate From 07/2010 to 03/2011 R$ (Pre - 11.75%) GBP (E.V.) 79,441 1,092
NDF Exchange rate From 07/2010 to 08/2010 R$ (Pre - 16.83%) US$ (E.V.) 90,075 781
Swap Exchange rate 07/2013 US$ (E.V.) +7% R$ (76%do CDI) 56,112 843
Swap Exchange rate From 07/2011to 12/2013 US$ (E.V.) +LIBOR 3M +3.83% R$ (97.50%do CDI) 330,750 (47,193)
Swap Interest rate 08/2012 US$ (E.V.) +LIBOR 3M +0.50% US$ (E.V.) +3,96% 83,575 (4,977)
Swap Interest rate From 07/2010 to 05/2012 US$ (E.V.) +LIBOR 3M +3.85% US$ (E.V.) +5,78% 62,787 (1,042)
Swap Interest rate From 07/2012 a 08/2013 US$ (E.V.) +LIBOR 6M +0.80% US$ (E.V.) +3,77% 838,762 (30,493)
Swap Interest rate 11/2012 US$ (E.V.) +LIBOR 12M +0.71% US$ (E.V.) +3,70% 198,025 (9,660)
Options Exchange rate 07 and 08/2010 - - 18,015 221
Future contract Exchange rate 08/2010 US$ (E.V.) R$ 153,917 (972)
Future contract Live cattle 11/2010 R$ - 41,810 (4)
(57,444)

Page: 6 0

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP and IFRS
Consolidated 12.31.09
Reference
Subject to value Market
Instrument hedge Maturity Receivable Payable (notional) value (1)
NDF Exchange rate 06/2010 R$ 8.39%p.a. US$ 786,667 20,918
NDF Exchange rate 06/2010 R$ 6%p.a. US$ 211,268 2,721
Swap Exchange rate From 01/2010 to 07/2013 US$ +7% 76%of CDI 56,112 279
Swap Exchange rate 09/2011 118.5%of CDI US$ +83%CDI 86,144 2,465
Swap Exchange rate 12/2011 US$ +LIBOR 3M +3.83% 97.83%of CDI 330,750 (51,190)
Swap Interest rate 08/2012 US$ +LIBOR 3M +1.76% US$ +4.74% 146,362 (4,712)
Swap Interest rate 08/2013 US$ +LIBOR 6M +0.70% US$ +3.77% 838,762 (24,741)
Swap Interest rate 12/2012 US$ +LIBOR 12M +0.71% US$ +3.69% 198,025 (5,262)
Future contract Exchange rate 02/2010 US$ R$ 122,751 20
(59,502)
BR GAAP and IFRS
C o nso lidated 01.01.09
Reference
Subject to value Market
Instrument hedge Maturity Receivable Payable (notional) value (1)
Swap Interest rate 07/2009 9.31%p.a. 93.72%of CDI 11,944 (52)
Swap Exchange rate From 01/2009 to 09/2009 US$ +4.75% 100%of CDI 613,802 60,530
Swap Exchange rate 02/2009 16.09%p.a. US$ 8,364 (2,871)
Swap Exchange rate From 07/2009 to 12/2011 US$ +7% 76%CDI 56,112 5,691
Swap Exchange rate From 03/2009 to 09/2011 118.5%CDI US$ +83%CDI 86,144 (19,084)
Swap Exchange rate From 04/2009 to 01/2013 US$ +LIBOR 6M +3.61% 96.67%CDI 215,495 (31,573)
Swap Interest rate From 02/2009 to 08/2013 US$ 4.08 % US$ (LIBOR) +0.62% 554,152 (34,976)
Swap Exchange rate From 01/2009 to 02/2009 US$ US$ 51,147 7,682
NDF Exchange rate From 01/2009 to 06/2009 15.31%p.a. US$ 382,881 (37,431)
NDF Exchange rate From 02/2008 to 03/2009 13.52%p.a. Euro 26,649 (5,310)
Future contract Exchange rate 02/2009 US$ R$ 327,529 (10,107)
(67,501)

(1) The market value determination method used by the Company consists of calculating the future value based on the contracted conditions and determining the present value based on market curves, extracted from the database of Bloomberg and BM&F.

The Company contracted swap operations, NDF and futures contracts with the objective of minimizing the effects of the changes in the exchange rates and for protection against the interest rate variations.

Page: 61

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Management understands that the results obtained with these derivative operations are in full compliance with the Risk Policy adopted by the Company.

4.4. Gains and losses of derivative financial instruments for hedge

The amounts of realized and unrealized gains and losses of financial instruments recorded in the year affected the Company’s net income in the accounts of financial income or expenses as well as shareholders’ equity, as shown below:

BR GAAP
Parent company
Shareholders' equity Income statement
06.30.10 12.31.09 01.01.09 06.30.10 06.30.09
Derivatives intended for protection
Exchange risks (11,076) (27,529) - -
Interest rate risk (45,131) (34,714) (7,202) (1,042) -
(56,207) (62,243) (7,202) (1,042) -
Derivatives intended for financial results
Interest rate risk - - 8
Exchange risks - - (973) 1,733
Market risk of live cattle - - (5) -
- - - (978) 1,741
(56,207) (62,243) (7,202) (2,020) 1,741
BR GAAP and IFRS
Consolidated
Shareholders' equity Income statement
06.30.10 12.31.09 01.01.09 06.30.10 06.30.09
Derivatives intended for protection
Exchange risks (11,076) (27,529) - - -
Interest rate risk (45,131) (34,714) (57,771) (1,042) -
(56,207) (62,243) (57,771) (1,042) -
Derivatives intended for financial results
Interest rate risk - - - - 8
Exchange risks - - 1,594 (191) 1,733
Market risk of live cattle - - - (5) -
- - 1,594 (196) 1,741
(56,207) (62,243) (56,177) (1,238) 1,741

Page: 62

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

4.4.1. Breakdown of the balances of financial instruments by category – except derivatives:

BR GAAP
Parent company 06.30.10
Loans and receivables Available for sale Trading securities Held to maturity Financial Liabilities Total
Assets
Amortized cost
Marketable securities - - - 27 - 27
Credits Notes 1,114,891 - - - - 1,114,891
Trade accounts receivable 111,959 - - - - 111,959
Fair value
Marketable securities 1,770 1,291,227 - - 1,292,997
Liabilities
Amortized cost
Loans and financing:
Local currency - - - - (1,406,120) (1,406,120)
Foreign currency - - - - (995,377) (995,377)
1,226,850 1,770 1,291,227 27 (2,401,497) 118,377
BR GAAP
Parent company 12.31.09
Loans and receivables Available for sale Trading securities Held to maturity Financial Liabilities Total
Assets
Amortized cost
Marketable securities - - - 27 - 27
Credits Notes 1,475,223 - - - - 1,475,223
Trade accounts receivable 126,087 - - - - 126,087
Fair value
Marketable securities - 1,991 617,877 - - 619,868
Liabilities
Amortized cost
Loans and financing
Local currency - - - - (1,677,753) (1,677,753)
Foreign currency - - - - (1,309,416) (1,309,416)
Debentures - - - - (2,089) (2,089)
1,601,310 1,991 617,877 27 (2,989,258) (768,053)

Page: 63

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP
Parent company 01.01.09
Loans and receivables Available for sale Trading securities Held to maturity Financial Liabilities Total
Assets
Amortized cost
Marketable securities - - - 263 - 263
Credits Notes 311,623 - - - - 311,623
Trade accounts receivable 43,054 - - - - 43,054
Fair value
Marketable securities - - 42,010 - - 42,010
Liabilities
Amortized cost
Loans and financing
Local currency - - - - (523,758) (523,758)
Foreign currency - - - - (1,078,902) (1,078,902)
354,677 - 42,010 263 (1,602,660) (1,205,710)
BR GAAP and IFRS
Consolidated 06.30.10
Loans and receivables Available for sale Trading securities Held to maturity Financial Liabilities Total
Assets
Amortized cost
Marketable securities - - - 234,772 - 234,772
Credits Notes 2,438,111 - - - - 2,438,111
Trade accounts receivable 124,388 - - - - 124,388
Fair value
Marketable securities - 426,003 1,293,113 - - 1,719,116
Liabilities
Amortized cost
Loans and financing
Local currency - - - - (3,485,856) (3,485,856)
Foreign currency - - - - (4,511,220) (4,511,220)
2,562,499 426,003 1,293,113 234,772 (7,997,076) (3,480,689)

Page: 64

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP and IFRS
Consolidated 12.31.09
Loans and Available Trading Held to Financial
receivables for sale securities maturity Liabilities Total
Assets
Amortized cost
Marketable securities - - - 223,511 - 223,511
Credits Notes 2,153,509 - - - - 2,153,509
Trade accounts receivable 125,837 - - - - 125,837
Fair value
Marketable securities - 543,717 2,254,982 - - 2,798,699
Liabilities
Amortized cost
Loans and financing
Local currency - - - - (4,569,660) (4,569,660)
Foreign currency - - - - (4,484,361) (4,484,361)
Debentures - - - - (2,089) (2,089)
2,279,346 543,717 2,254,982 223,511 (9,056,110) (3,754,554)
BR GAAP and IFRS
Consolidated 01.01.09
Loans and Available Trading Held to Financial
receivables for sale securities maturity Liabilities Total
Assets
Amortized cost
Marketable securities - - - 263 - 263
Credits Notes 1,389,624 - - - - 1,389,624
Trade accounts receivable 103,635 - - - - 103,635
Fair value
Marketable securities - 82,297 660,144 - - 742,441
Liabilities
Amortized cost
Loans and financing
Local currency - - - - (1,221,808) (1,221,808)
Foreign currency - - - - (4,072,604) (4,072,604)
Debentures - - - - (4,185) (4,185)
1,493,259 82,297 660,144 263 (5,298,597) (3,062,634)

4.5. Breakdown of the balances of financial instruments designated for cash flow hedge accounting and export revenues

The Company executed the formal designation of its operations for hedge accounting treatment for the derivative financial instruments to protect cash flows and export revenues, documenting: (i) the relationship of the hedge, (ii) the objective and risk management strategy of the Company in executing the hedge, (iii) the

Page: 65

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

identification of the financial instrument, (iv) the hedge object or transaction, (v) the nature of the risk to be hedged, (vi) the description of the hedge relationship, (vii) the demonstration of correlation between the hedge transaction and the hedge object, when applicable, and (viii) prospective demonstration of the effectiveness of the hedge.

Hedged items for which Company designates hedge accounting are highly probable and present almost a perfect combination with the hedge transaction in terms of effectiveness. In other words the consolidated statements of income and comprehensive income reflect matching results consistent with initial coverage intention documented in the Risk Policy.

The Company recorded the unrealized results in the shareholders’ equity of the designated derivatives for interest rates and exchange rates risks.

The impacts referring to the interest swap positions are shown below:

BR GAAP and IFRS
Parent Company and Consolidated
06.30.10
Balance (contract curve) Balance (MTM)
Hedge instrument Hedged object Protected risk Maturity date Asset Liability Asset Liability
Sw ap contract of US$65,000 (assets Libor 6 months +1.75%/ liabilities 4.22%) Debt of US$65,000 interest of Libor 6 months + overlibor 1.75% Libor post x fixed rate 07.25.2012 1,070 (2,114) 349,615 (352,471)
Sw ap contract of US$75,000 (assets Libor 6 months/ liabilities 4.06%) Debt of US$75,000 interest of Libor 6 months + overlibor 0.9% Libor post x fixed rate 07.22.13 207 (2,179) 527,745 (535,840)
Sw ap contract of US$30,000 (assets Libor 6 months +0.8%/ liabilities 4.31%) Debt of US$30,000 interest of Libor 6 months + overlibor 0.8% Libor post x fixed rate 08.23.13 199 (718) 263,651 (266,848)
Sw ap contract of US$20,000 (assets Libor 6 months +0.8%/ liabilities 4.36%) Debt of US$20,000 interest of Libor 6 months + overlibor 0.8% Libor post x fixed rate 07.19.13 173 (637) 176,204 (178,420)
Sw ap contract of US$20,000 (assets Libor 3 months +0.5%/ liabilities 3.96%) Debt of US$20,000 interest of Libor 3 months + overlibor 0.5% Libor post x fixed rate 08.10.12 45 (206) 316,597 (318,599)
Sw ap contract of US$20,000 (assets Libor 3 months +0.5%/ liabilities 3.96%) Debt of US$20,000 interest of Libor 3 months + overlibor 0.5% Libor post x fixed rate 08.15.12 42 (179) 316,484 (318,468)
Sw ap contract of US$10,000 (assets Libor 3 months +0.5%/ liabilities 3.96%) Debt of US$10,000 interest of Libor 3 months + overlibor 0.5% Libor post x fixed rate 08.20.12 20 (83) 158,177 (159,167)
Sw ap contract of US$20,000 (assets Libor 6 months / liabilities 3.82%) Debt of US$20,000 interest of Libor 6 months + overlibor 1.45% Libor post x fixed rate 03.20.13 41 (386) 140,872 (142,887)
Sw ap contract of US$30,000 (assets Libor 6 months / liabilities 3.79%) Debt of US$30,000 interest of Libor 6 months + overlibor 1.45% Libor post x fixed rate 02.13.13 71 (694) 211,676 (214,667)
Sw ap contract of US$25,000 (assets Libor 6 months +1.65%/ liabilities 4.15%) Debt of US$25,000 interest of Libor 6 months + overlibor 1.65% Libor post x fixed rate 05.10.13 107 (187) 176,824 (178,038)
Swap constract of US$50,000 (assets Libor 6 months +0.6%/ liabilities 2.98%) Debt of US$50,000 interest of Libor 6 months + overlibor 0.60% Libor post x fixed rate 12.19.12 418 (1,245) 526,542 (530,092)
Swap constract of US$50,000 (assets Libor 6 months +0.6%/ liabilities 2.99%) Debt of US$50,000 interest of Libor 6 months + overlibor 0.60% Libor post x fixed rate 11.26.12 44 (97) 437,091 (439,861)
Contrato de Sw ap de US$50.000 (Ativo Libor 6meses +1,55%/ Passivo 3,55%) Debt of US$50,000 interest of Libor 6 months + overlibor 1.55% Libor post x fixed rate 07.02.12 892 (1,599) 269,250 (270,838)
Sw ap contract of US$50,000 (assets Libor 12 months +0.71%/ Liabilities 3.57%) Debt of US$50,000 interest of Libor 12 months + overlibor 0.71% Libor post x fixed rate 11.19.12 903 (1,876) 265,072 (269,588)
Sw ap contract of US$50,000 (assets Libor 12 months +0.71%/ Liabilities 3.82%) Debt of US$50,000 interest of Libor 12 months + overlibor 0.71% Libor post x fixed rate 11.26.12 876 (1,940) 264,934 (270,079)
Contrato de Sw ap de US$35.000 (Assets 7%a.a / Liabilities 76%CDI ) Debt of US$35,000 interest of 7% p.a. (USD) Cupom X CDI 07.15.13 2,047 (1,673) 14,986 (14,144)
Sw ap contract of US$50,000 (assets Libor 3 months +2.50%/ Liabilities 92.5% CDI) Debt of US$50,000 interest of Libor 3 months + overlibor 2.50% Libor X CDI 10.01.13 635 (1,930) 7,923 (21,918)
Sw ap contract of US$100,000 (assets Libor 3 months + overlibor 4.50% / liabilities 100%CDI ) Debt of US$100,000 interest of Libor 3 months + overlibor 1.00%+Bail of 3.5% p.a. Libor X CDI 12.23.13 177 (451) 25,105 (58,303)
7,967 (18,194) 4,448,748 (4,540,228)

Page: 66

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The impacts referring to the NDF positions are shown below:

Consolidated
06.30.10
NDF R$ x USD R$ x EUR R$ x GBP
Maturities Curve MTM (1) Notional Average US$ Curve MTM (1) Notional Average EUR Curve MTM (1) Notional Average GBP
July 2010 2,740 2,966 85,000 1.8401 3,532 3,645 20,000 2.3923 310 344 5,000 2.7669
August 2010 780 1,341 70,000 1.8351 3,412 3,495 20,000 2.3986 87 172 6,500 2.7417
September 2010 1,535 2,050 65,000 1.8616 2,740 2,881 15,000 2.4353 133 208 4,500 2.7813
October 2010 2,912 3,509 60,000 1.9034 2,137 2,164 10,000 2.4753 113 171 3,000 2.8125
November 2010 2,063 2,935 60,000 1.9080 1,921 2,201 10,000 2.4992 29 60 2,500 2.7984
December 2010 1,916 2,424 50,000 1.9218 651 840 5,000 2.4606 57 116 2,500 2.8442
January 2011 583 1,248 45,000 1.9161 250 299 5,000 2.3670 (44) (4) 2,500 2.8178
February 2011 798 1,020 20,000 1.9550 243 175 6,000 2.3544 (2) 8 2,000 2.8408
March 2011 (210) 86 20,000 1.9185 - - - - 0 17 1,000 2.8761
April 2011 208 435 15,000 1.9599 - - - - - - - -
May 2011 260 245 10,000 1.9689 - - - - - - - -
13,586 18,259 500,000 1.8869 14,887 15,701 91,000 2.4215 684 1,092 29,500 2.7904

(1) Mark to market

For the put options, the Company designates only their intrinsic value as a hedge instrument (hedge accounting), opting to recognize the time value in the financial result (statement of income). If the hedge is not effective and the option is lost due to devaluation of the Brazilian real, the losses related to the time value of the options will be registered in the financial result.

The time value of an option can be calculated by the difference between the fair value of the option on the measurement date (quotation of the option that represents the fair value of premium) and the intrinsic value of the option on the measurement date. When the quotation of the option is not available in an active market, the fair value will be based on an option pricing model (Black-Scholes or Binomial).

This type of foreign exchange hedge using the put option consists of designating the variation of the intrinsic value of the put option only in the case of appreciation of the Brazilian real (“one-sided risk”).

Page: 67

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The impacts referring to the PUT positions are shown below:

BR GAAP and IFRS
Consolidated
06.30.10
PUT R$ x USD
Maturities Curve MTM Notional USD Médio
July 2010 - - 5,000 1.7900
August 2010 52 221 5,000 1.8120
TOTAL 52 221 10,000 1.8010

The derivative financial instruments that do not meet the criteria required by CVM Deliberation No. 604/09 were not accounted for in accordance with the hedge accounting method and were recorded on the balance sheet at their fair value with its changes recorded in the statement of income.

On June 1, 2010 the Company determined derivative instruments (pre-export facilities) as exchange rate coverage with quotation of 1.8255 Real per Dollar (Central Bank average rate of daily exchange rates at this date).

As authorized by CVM Deliberation No. 604/09, the Company uses the exchange rates variation of pre-export finance facilities contracts as a coverage instrument with the objective to protect the exchange rate risk applied to highly probable futures sales in foreign currency (U.S. Dollars).

The Company adopts the effectiveness test retrospectively in comparison to the exchange rate variation arising from the pre-export finance facilities contracts (fair value variation of the coverage instrument) measured through the variation of the exchange rate, with fair value variation of the highly probable future sales (fair value variation of the coverage instrument), which are measured through the exchange rate variation (spot-to-spot rate method).

The position of the pre-export facilities designated as hedge accounting as of June 30, 2010, are as follows:

BR GAAP and IFRS
Consolidated
06.30.10
Hedge instrument Subject to hedge Type of risk hedged Maturity Notional (US$) MTM
PPEs Sales foreign market US$ (E.R.) From 07/2010 to 08/2013 511,777 921,966

Page: 68

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

4.6. Determination of the fair value of financial instruments

The Company discloses its financial assets and liabilities at fair value, based on the pertinent accounting pronouncements that define fair value, which refers to concepts of valuation and practices, and requires certain disclosures on the fair value.

Specifically as regards disclosure, the Company applies the hierarchy requirements set out in CVM Deliberation No. 604/09, which involves the following aspects:

· Definition of the fair value as the price that should be received in the sale of an asset or paid in the transfer of a liability in a regular transaction between market players on the measurement date, and establishment of assumptions for the fair value measurement;

· Hierarchy on 3 levels for measurement of the fair value, according to observable inputs for the valuation of an asset or liability on the date of its measurement.

Valuation on 3 levels of hierarchy for measurement of the fair value is based on observable and non-observable inputs. Observable inputs reflect market data obtained from independent sources, while non-observable inputs reflect the Company’s market assumptions. These two types of input create the hierarchy of fair value presented below:

· Level 1 - Prices quoted for identical instruments in active markets;

· Level 2 - Prices quoted in active markets for similar instruments, prices quoted for identical or similar instruments in non-active markets and evaluation models for which inputs are observable;

· Level 3 - Instruments whose significant inputs are non-observable .

Management understands that due to the short-term cycle, balances of cash and cash equivalents, accounts receivable and accounts payable are close to their fair value recognition. In relation to loans and credit facilities the book value is close to the fair value in a major portion of the total gross debt. That is justified by floating BNDES interest rates credit lines (TJLP) and floating trade finance interest rates loans (LIBOR, CDI). Company is subject to differences between book value and fair value only in Capital Markets transactions (Bond). On June 30, 2010, fair value negative adjustment for Bond BRFSBZ amounted to R$47,235.

Page: 69

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The comparison between book value and fair value of financial assets and liabilities is presented below:

4.6.1 Comparison between accounting value and fair value of financial instruments

BR GAAP
Parent company
06.30.10 12.31.09 01.01.09
Book value Fair value Book value Fair value Book value Fair value
Cash and cash equivalents 199,035 199,035 223,434 223,434 29,588 29,588
Marketable securities:
Available for sales 1,770 1,770 1,991 1,991 - -
Trading securities 1,291,227 1,291,227 617,877 617,877 42,010 42,010
Held to maturity 27 27 27 27 263 263
Trade accounts receivables, net 1,114,891 1,114,891 1,475,223 1,475,223 311,623 311,623
Short and long term debt (2,401,497) (2,401,497) (2,987,169) (2,987,169) (1,602,660) (1,602,660)
Trade accounts payable (950,066) (950,066) (976,430) (976,430) (340,535) (340,535)
Other financial assets 37,252 37,252 24,747 24,747 10,405 10,405
Other financial liabilities (95,478) (95,478) (86,969) (86,969) (7,410) (7,410)
(802,839) (802,839) (1,707,269) (1,707,269) (1,556,716) (1,556,716)
BR GAAP and IFRS
Consolidated
06.30.10 12.31.09 01.01.09
Book value Fair value Book value Fair value Book value Fair value
Cash and cash equivalents 1,844,608 1,844,608 1,898,240 1,898,240 1,233,455 1,233,455
Marketable securities:
Available for sales 426,003 426,003 543,717 543,717 82,297 82,297
Trading securities 1,293,113 1,293,113 2,254,982 2,254,982 660,144 660,144
Held to maturity 234,772 246,125 223,511 235,792 263 263
Trade accounts receivables, net 2,438,111 2,438,111 2,153,509 2,153,509 1,389,624 1,389,624
Short and long term debt (7,997,076) (7,949,841) (9,054,021) (9,070,582) (5,294,412) (5,294,412)
Trade accounts payable (1,813,079) (1,813,079) (1,905,368) (1,905,368) (1,083,385) (1,083,385)
Other financial assets 38,256 38,256 27,586 27,586 79,211 79,211
Other financial liabilities (95,700) (95,700) (87,088) (87,088) (146,712) (146,712)
(3,630,992) (3,572,404) (3,944,932) (3,949,212) (3,079,515) (3,079,515)

4.6.2 Fair value valuation hierarchy

The table below presents the financial assets and liabilities of the parent company and of the consolidated balance sheet, and the general classification of these instruments according with the valuation hierarchy.

Page: 70

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP
Parent company
06.30.10
Level 1 Level 2 Level 3 Total
Assets
Financial assets:
Available for sale
Shares (a) 1,770 - - 1,770
Held for trading:
Bank deposit certificates (b) - 868,152 - 868,152
Financial treasury bills (a) 423,075 - - 423,075
Other financial assets
Derivatives designated as hedge (c) - 37,252 - 37,252
424,845 905,404 - 1,330,249
Liabilities
Financial liabilities:
Other financial liabilities
Derivatives designated as hedge (c) - (93,459) - (93,459)
Derivatives not designated as hedge (c) - (2,019) - (2,019)
- (95,478) - (95,478)
BR GAAP
Parent company
12.31.09
Level 1 Level 2 Level 3 Total
Assets
Financial assets:
Available for sale
Shares (a) 1,991 - - 1,991
Held for trading:
Bank deposit certificates (b) - 517,487 - 517,487
Financial treasury bills (a) 100,390 - - 100,390
Other financial assets
Derivatives designated as hedge (c) - 24,727 - 24,727
Derivatives not designated as hedge (c) - 20 - 20
102,381 542,234 - 644,615
Liabilities
Financial liabilities:
Other financial liabilities
Derivatives designated as hedge (c) - (86,969) - (86,969)
- (86,969) - (86,969)

Page: 7 1

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP
Parent company
01.01.09
Level 1 Level 2 Level 3 Total
Assets
Financial assets:
Held for trading:
Bank deposit certificates (b) - 42,010 - 42,010
Other financial assets
Derivatives designated as hedge (c) - 10,405 - 10,405
- 52,415 - 52,415
Liabilities
Financial liabilities:
Other financial liabilities
Derivatives designated as hedge (c) - (7,410) - (7,410)
- (7,410) - (7,410)
BR GAAP and IFRS
Consolidated
06.30.10
Level 1 Level 2 Level 3 Total
Assets
Financial assets:
Available for sale
Bank deposit certificates (b) - 48,274 - 48,274
Brazilian foreign debt securities (a) 60,333 - - 60,333
Financial treasury bills (a) 162,266 - - 162,266
Exclusive investment funds - 50,601 - 50,601
Investment funds (a) 102,759 - - 102,759
Shares (a) 1,770 - - 1,770
Held for trading:
Bank deposit certificates (b) - 870,038 - 870,038
Financial treasury bills (a) 423,075 - - 423,075
Other financial assets
Derivatives designated as hedge (c) - 37,252 - 37,252
Derivatives not designated as hedge (c) - 1,004 - 1,004
750,203 1,007,169 - 1,757,372
Liabilities
Financial liabilities:
Other financial liabilities
Derivatives designated as hedge (c) - (93,459) - (93,459)
Derivatives not designated as hedge (c) - (2,241) - (2,241)
- (95,700) - (95,700)

Page: 7 2

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP and IFRS
Consolidated
12.31.09
Level 1 Level 2 Level 3 Total
Assets
Financial assets:
Available for sale
Bank deposit certificates (b) - 64,482 - 64,482
Brazilian foreign debt securities (a) 59,077 - - 59,077
Exclusive investment funds - 51,413 - 51,413
Investment funds (a) 151,664 - - 151,664
Shares (a) 1,991 - - 1,991
Held for trading
Bank deposit certificates (b) - 2,154,592 - 2,154,592
Financial treasury bills (a) 100,390 - - 100,390
Other financial assets
Derivatives designated as hedge (c) - 24,727 - 24,727
Derivatives not designated as hedge (c) - 2,859 - 2,859
Total assets 313,122 2,298,073 - 2,611,195
Liabilities
Financial liabilities:
Other financial liabilities
Derivatives designated as hedge (c) - (86,969) - (86,969)
Derivatives not designated as hedge (c) - (119) - (119)
- (87,088) - (87,088)
BR GAAP and IFRS
Consolidated
01.01.09
Level 1 Level 2 Level 3 Total
Assets
Financial assets:
Available for sale
Brazilian foreign debt securities (a) 82,297 - - 82,297
Held for trading:
Bank deposit certificates (b) - 660,144 - 660,144
Other financial assets
Derivatives designated as hedge (c) - 68,516 - 68,516
Derivatives not designated as hedge (c) - 10,695 - 10,695
82,297 739,355 - 821,652
Liabilities
Financial liabilities:
Other financial liabilities
Derivatives designated as hedge (c) - (136,605) - (136,605)
Derivatives not designated as hedge (c) - (10,107) - (10,107)
- (146,712) - (146,712)

Page: 7 3

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

We present below a description of the valuation methodologies used by the Company for financial instruments measured at fair value:

(a) Investments in financial assets in the categories of Brazilian foreign debt securities, national treasury certificates, financial treasury notes, financial investment fund and shares are classified at Level 1 of the fair value hierarchy, as the market prices are available in an active market.

(b) Investments in financial assets in the categories of CDB (“Bank Deposit Certificates”), and repurchase agreements backed by debentures are classified at Level 2, since the method of valuation at fair value occurs through the price quotation of similar financial instruments in non-active markets.

(c) Derivatives are valued through existing pricing models very well accepted by financial market based on public market inputs such as interest rate forecasts, volatility factors and foreign currency rates. We classify these instruments at level 2 of the valuation hierarchy. Such instruments include swaps, NDFs and options.

The valuation model used by the Company for derivatives considers its own performance risk. Although during 2009, there has been a deterioration of the global credit market, without a full recovery, management believes that there is a low risk of non-performance as of June 30, 2010.

4.7. Credit management

The Company is potentially subject to the credit risk related to trade accounts receivable, financial investments and derivative contracts. The Company limits its risk associated with these financial instruments, allocating them to financial institutions selected by the criteria of rating and percentage of maximum concentration by counterparties.

The credit risk concentration of accounts receivable is minimized due to the diversification of the customer portfolio and concession of credit to customers with sound financial and operational conditions. The Company does not normally require collateral for credit sales, yet it has a contracted credit insurance policy for specific markets.

The wholly-owned subsidiary Sadia’s financial assets can only be allocated to the counterparts with the minimum rating classification of “investment grade” and within predetermined limits approved by the Risk, Credit and Financing Management

Page: 7 4

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Committee. The maximum net exposure per financial institution (financial assets less financial liabilities) cannot be higher than 10% of the financial institution equity or the Company’s equity, whichever is smaller.

.

4.8. Liquidity risk management

Liquidity risk management aims to reduce the impacts caused by events which may affect the Company’s cash flow performance.

The Company has identified market risk factors which are linked to future cash flow and may jeopardize its liquidity. It also calculates the Cash Flow at Risk (“CFAR”) on a twelve-month basis targeting to verify possible cash flow forecast deviations. The Company established a minimum amount of cash and cash equivalents to be considered based on the average monthly turnover and EBITDA figures, among other aspects.

Derivatives transactions may demand payment of cyclical variations (deposit margins). Currently, the Company holds only BM&F operations with daily variations. The control of variations is conducted through the Value at Risk (VAR) methodology, which measures with statistical accuracy of the potential probable maximum variation to be paid on a 1 to 21-day interval, with the purpose of monitoring if the amount is within the limits established in the policy.

With regards to the investments, the Company presents conservative allocation principles focusing on liquidity, diversification (avoiding counterparty concentration) and profitability.

The Company’s also considers its refinancing risks. The current leverage profile and debt maturity schedule allow the Company to maintain a satisfactory level of refinancing risks given the credit and capital markets environment and the Company’s operating performance, given the internal targets, the majority of the Company’s financial debt is allocated in the long term. On June 30, 2010, the long term debt portion accounted for 73% of total debt, presenting an average term of higher than 3 years.

The table below summarizes the commitments and contractual obligations that may impact Company’s liquidity as of June 30, 2010:

Page: 7 5

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP
Parent company
06.30.10
Book Cash flow Up to 6 After 5
value contracted months 2011 2012 2013 2014 years
Non derivatives financial liabilities
Loans and financing 2,401,497 2,586,927 475,999 718,185 956,854 332,347 51,051 52,490
Trade accounts payable 950,066 950,066 950,066 - - - - -
Capital lease 8,757 9,472 2,580 4,166 2,116 520 45 45
Operational lease - 141,008 22,410 36,246 31,630 24,540 15,229 10,953
Derivatives financial liabilities
Designated as hedge accounting
Interest rate derivatives 91,480 111,538 23,784 42,405 33,170 12,178 - -
Currency derivatives (NDF) 35,052 71,548 55,240 16,308 - - - -
Currency derivatives (Options) 221 290 290 - - - - -
Not designated as hedge accounting
Derivativos cambiais ( NDF ) - - - - - - - -
Currency derivatives (Future) 972 972 972 - - - - -
Interest rate derivatives 1,040 1,743 422 890 431 - - -
Commodities derivatives 4 4 4 - - - - -
BR GAAP and IFRS
Consolidated
06.30.10
Book Cash flow Up to 6 After 5
value contracted months 2011 2012 2013 2014 years
Non derivatives financial liabilities
Loans and financing 6,190,716 8,001,992 1,570,896 2,611,073 2,270,801 755,937 239,556 553,728
Bonds BRF 1,371,238 2,330,691 48,978 97,957 97,957 97,957 97,957 1,889,886
Bonds Sadia 435,122 585,039 14,898 27,091 27,091 27,091 27,091 461,777
Trade accounts payable 1,813,079 1,813,079 1,813,079 - - - - -
Capital lease 8,757 9,472 2,580 4,166 2,116 520 45 45
Operational lease - 483,030 119,537 184,921 127,844 24,546 13,091 13,091
Derivatives financial liabilities
Designated as hedge accounting
Interest rate derivatives 91,480 111,538 23,784 42,405 33,170 12,178 - -
Currency derivatives (NDF) 35,052 71,548 55,240 16,308 - - - -
Currency derivatives (options) 221 290 290 - - - - -
Not designated as hedge accounting
Currency derivatives (NDF) 781 1,502 1,502 - - - - -
Currency derivatives (Future) 972 972 972 - - - - -
Interest rate derivatives 1,042 1,743 422 890 431 - - -
commodities derivatives 4 4 4 - - - - -

4.9. Commodity price risk management

In the normal course of its operations, the Company purchases commodities, mainly corn, soymeal and live hog, which are some of the individual components of production cost.

Corn and soymeal prices are subject to volatility resulting from weather conditions, crop yield, transportation costs, storage costs, agricultural policy of the government, foreign exchange rates and the prices of these commodities on the international market, among others factors. The prices of hog acquired from third parties are subject to market conditions and are influenced by internal availability and levels of demand in the international market, among other aspects.

Page: 7 6

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The Risk Policy establishes limits for hedging the corn and soymeal purchase flow, aiming to diminish the impact of a price increase of these raw materials, with the possibility of using derivative instruments or inventory management for this purpose. Currently the management of inventory levels is used exclusively as a hedging instrument.

The subsidiary Sadia maintains its strategy of risk management, working mainly using physical controls, which includes the purchase of grains at fixed prices and at prices to be fixed in conjunction with future contracts of commodities (grains). The Company has a Committee of Commodities and Risk Management, comprising of the Chairman, financial executives and operational executives with the purpose to discuss and to deliberate on the strategies and the positioning of the Company in relation to the diverse factors of risk that impact in the operational results.

On June 30, 2010 there were no open positions of commodities derivatives.

4.10. Sensitivity analysis chart

The Company has loans, payables and receivables in foreign currency, and in order to mitigate the risks incurred through foreign exchange exposure it contracts derivative financial instruments.

The Company understands that the present interest rate fluctuations do not significantly affect its financial result since it opted to change to fixed rate a considerable part of its floating interest rates debts by using derivative transactions (interest rates swaps). Company designates such derivatives as hedge accounting and therefore adopts special accounting treatment proving the prospective and retrospective effectiveness of the hedge transaction.

Five scenarios are considered for the next twelve-month period in the table below, considering the percentage variations of the quotes of parity between the Brazilian Reais and U.S. Dollar, Brazilian Reais and Euro and Brazilian Reais and Pounds, whereas the most likely scenario is that adopted by the Company. The remaining scenarios are based on quoted prices from the Brazilian Central Bank as of June 30, 2010.

Page: 7 7

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Parity - Brazilian Reais x U.S. Dollar 1.8015 1.6214 1.3511 2.2519 2.7023
Transaction/Instrument Risk Scenario I Scenario II Scenario III Scenario IV Scenario V
(probable) (10% appreciation) (25% appreciation) (25% devaluation) (50% devaluation)
NDF (hedge accounting) Devaluation of R$ 42,677 132,752 267,865 (182,511) (407,698)
Options - currencies Devaluation of R$ (538) 1,259 3,961 (538) (538)
Export pre - payment Devaluation of R$ 12,283 104,479 242,774 (218,209) (448,700)
Exports Appreciation of R$ (44,213) (147,611) (302,716) 214,295 472,804
Net effect 10,209 90,879 211,884 (186,962) (384,133)
Statement of income (538) (538) (538) 3,966 8,470
Shareholders' equity 10,747 91,417 212,422 (190,928) (392,602)
Parity - Brazilian Reais x Euro 2.2043 1.9839 1.6532 2.7554 3.3065
Transaction/Instrument Risk Scenario I Scenario II Scenario III Scenario IV Scenario V
(probable) (10% appreciation) (25% appreciation) (25% devaluation) (50% devaluation)
NDF EUR Devaluation of R$ 19,765 39,824 69,912 (30,383) (80,531)
Exports Appreciation of R$ (19,765) (39,824) (69,912) 30,383 80,531
Net effect - - - - -
Statement of income - - - - -
Shareholders' equity - - - - -
- - - - -
Parity - Brazilian Reais x Pound 2.6929 2.4236 2.0197 3.3661 4.0394
Transaction/Instrument Risk Scenario I Scenario II Scenario III Scenario IV Scenario V
(probable) (10% appreciation) (25% appreciation) (25% devaluation) (50% devaluation)
NDF GBP Devaluation of R$ 2,876 10,820 22,736 (16,984) (36,844)
Exports Appreciation of R$ (2,876) (10,820) (22,736) 16,984 36,844
Net effect - - - - -
Statement of income - - - - -
Shareholders' equity - - - - -

5. SEGMENT INFORMATION

The operating segments are reported consistently with the management reports provided to the chief operating decision makers (Board of Directors and Officers) for purposes of appraising the performance of each segment and allocating resources.

The reportable segments identified primarily observe the division by geographical region of sales of the Company, as: domestic and foreign market. In turn, these segments are subdivided according to the nature of the products whose characteristics are described below:

· Fresh (in natura): involves the production and trade of whole birds and poultry cuts as well as pork and beef cuts.

· Elaborated and processed: involves the production and trade of processed poultry, pork and beef derivative foods, margarines and soy vegetarian products.

· Dairy: involves the production and trade of pasteurized and UHT milk as well as milk derivatives, including flavored milk, yogurts, fruit juices, soy-based beverages, cheeses and desserts.

Page: 7 8

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

· Others: involves the production and trade of animal feed, soymeal and refined soy flour.

The net sales for each one of the reportable operating segments are presented below:

Consolidated — 06.30.10 06.30.09
Net sales - domestic market:
In natura products 785,989 260,828
Processed products 2,992,332 1,269,008
Dairy products 1,109,618 1,053,722
Other 1,253,922 426,212
6,141,861 3,009,770
Net sales - foreign market:
In natura products 3,599,897 1,841,297
Processed products 796,172 440,338
Dairy products 11,206 13,443
Other 29,818 1,182
4,437,093 2,296,260
10,578,954 5,306,030

The operating results before financial income (expenses) and others for each one of the reportable operating segments are presented below:

Consolidated — 06.30.10 06.30.09
Operating income (loss):
Domestic market 460,424 131,280
Foreign market 102,071 (129,834)
562,495 1,446

No customer was individually responsible for more than 5% of the total revenue earned in the year ended June 30, 2010.

Net export revenue by region is presented below:

Page: 7 9

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Consolidated — 06.30.10 06.30.09
Export net income per region:
Europe 860,280 448,238
Far East 971,963 519,158
Middle East 1,380,336 734,377
Eurasia (including Russia) 502,210 257,435
America / Africa / Other 722,304 337,052
4,437,093 2,296,260

The goodwill originating from the expectation of future profitability, as well as the intangible assets with indefinite useful life (trademarks and patents), were allocated to the reportable operating segments, taking into account the nature of the products manufactured in each segment (cash-generating unit), and the allocation is presented below:

BR GAAP and IFRS
Consolidated
Domestic market Foreign market Total
06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Goodwill due to expectation of future profitability 1,896,442 1,896,442 1,070,724 936,379 938,327 475,008 2,832,821 2,834,769 1,545,732
Trademarks 1,065,478 1,065,478 - 190,522 190,522 - 1,256,000 1,256,000 -
Patents 5,469 1,900 - - - - 5,469 1,900 -
2,967,389 2,963,820 1,070,724 1,126,901 1,128,849 475,008 4,094,290 4,092,669 1,545,732

Information referring to the total assets by reportable segments is not being presented, as it does not compose the set of information made available to the Company’s Management, which make investment decisions on a consolidated basis.

6. BUSINESS COMBINATION

As permitted by CVM Deliberation No. 610/09 and mentioned in explanatory note 1, the Company adopted the exemption pertaining to the merger opting not to re-measure the mergers that took place before January 1, 2009.

6.1. Business Combination - Sadia

On July 8, 2009, the shareholders of BRF approved in a special meeting of shareholders the merger of all 226,395,405 shares issued by HFF Participações S.A. (former parent company of Sadia) based on the economic value in the amount of R$1,482,890, through the exchange of 37,637,557 new shares of common stock,

Page: 80

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

registered, in book-entry format and without par value, issued by BRF, for the issue price of thirty-nine Brazilian Reais and forty centavos (R$39.40) per share.

On August 18, 2009, the merger of Sadia’s common and preferred shares was approved by BRF shareholders, at an extraordinary shareholders’ general meeting, excluding shares indirectly owned by the Company, through the issuance of 25,904,595 common shares and 420,650,712 preferred shares issued by Sadia, according to its economic value, in the amount of R$2,335.5, through the issuance of 59,390,963 new common registered shares, with no par value issued by BRF, for thirty-nine Brazilian Reais and thirty-two cents (R$39.32) per share. On the date hereof, Sadia became a wholly-owned subsidiary of BRF.

The schedule below shows the assessment of the cost of acquisition determined in accordance with CVM Deliberation No. 580/09:

Number of shares exchanged on July 8, 2009 37,637,557
Number of shares exchanged on August 18, 2009 59,390,963
Total stock 97,028,520
Quoted BRF stock (lots of 1,000) on July 8, 2009 40
Cost of acquisition at fair value 3,881,141
Net assets acquired at fair value (2,587,323)
Goodwill based on expectation of future profitability 1,293,818

The costs related to the transaction are represented by commissions, fees of counsel and auditors, among others, and amount to R$44,002, include in the results for the year ended on December 31, 2009 in the item of other operating results.

The identifiable assets acquired and liabilities assumed that were acknowledged on the date of acquisition and the corresponding fair value, on the date of acquisition, are presented below:

Page: 8 1

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Net assets Adjustment — CVM Net assets
acquired Deliberation acquired at fair
07.08.09 No.580/09 value
Cash equivalents 1,759,726 - 1,759,726
Trade accounts receivable and other receivables 609,823 - 609,823
Inventories 1,192,981 897 (a) 1,193,878
Biological assets 465,630 - 465,630
Others 546,625 - 546,625
Total current assets 4,574,786 897 4,575,683
Long-term assets 1,421,216 1,155,771 (g) 2,576,987
Biological assets 221,449 - 221,449
Investments 14,716 - 14,716
Property, plant and equipment 4,034,701 2,057,092 (b) 6,091,793
Intangible 58,589 1,393,000 (c) 1,451,589
Total non-current assets 5,750,671 4,605,863 10,356,534
Total assets 10,325,457 4,606,760 14,932,217
Loans and financing 4,425,116 (34,530) (d) 4,390,586
Trade accounts payable 889,313 - 889,313
Taxes and contribution 80,026 - 80,026
Dividends payable 830 - 830
Provisions 286,323 139,170 (e) 425,493
Others 391,731 - 391,731
Total current liabilities 6,073,339 104,640 6,177,979
Loans and financing 3,503,567 - 3,503,567
Provisions 337,187 630,258 (f) 967,445
Others 286,392 1,409,510 (g) 1,695,902
Total non-current liabilities 4,127,146 2,039,768 6,166,915
Shareholders’ equity 124,971 2,462,352 (h) 2,587,323
Total liabilities 10,325,457 4,606,760 14,932,217

(a) Refers to the adjustment to the fair value of the inventories realized in full in year 2009 in the amount of R$897;

(b) Refers to the adjustment to the fair value of the fixed assets according to an appraisal report prepared by an external expert, which is being realized by its economic useful life (see note 17). The accumulated depreciation of the fair value on June 30, 2010 corresponds to approximately R$55,325 (R$32,871 on December 31, 2009);

(c) Refers to the fair value of the brands whose useful lives are indefinite and to the fair value of assets of definite useful life, such as relationship with suppliers and patents. The realization of the fair value occurs by means of rates that vary from 25% to 48% p.a. The accumulated amortization of the fair value of the

Page: 8 2

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

intangibles with definite useful life on June 30, 2010 corresponds to approximately R$56,304 (R$28,152 on December 31, 2009);

(d) Refers to the adjustment to the fair value of the loans and financing realized according to their maturity dates. The accumulated realization on June 30, 2010 corresponds to approximately R$1,994 of expense (R$1,332 of revenue on December 31, 2009);

(e) Refers to the fair value of the guarantees and accommodation papers granted by Sadia and deferred revenue related to the sale of employee banking relationship realized according to the maturity dates. The accumulated realization on June 30, 2010 corresponds to approximately R$31,435 (R$19,929 on December 31, 2009);

(f) Refers to the fair value of the contingent tax, civil and employment liabilities. The fair value of the contingent tax liabilities was determined, at first, based on the appraisal of external consultants, who attributed to these processes an average probability of loss. Then, Management measured the contingencies considering the premises of the programs of fiscal recovery promoted from time to time by the State and Federal Governments, which is the amount that the counterparties would be willing to liquidate from the existing debts. On June 30, 2010, there was no balance of accumulated realization for such liabilities;

(g) Refers to the effect of the deferred taxes on the adjustments (a) until (f) presented above and the effect of the deferred taxes on the difference between the accounting and tax goodwill; and

(h) Refers to the corresponding entry of the adjustments (a) until (g) in the shareholders’ equity.

The remaining goodwill generated in the relation of exchange of shares with Sadia includes, in addition to the controlling goodwill, the future benefits expected from the synergy of the transactions of the companies.

The goodwill for tax purposes, generated in the operation, corresponds to R$3,594,467. The Management of the Company believes that the goodwill originating from that acquisition is deductible for tax purposes.

If the business combination had occurred on January 1, 2009, the Management estimates that the consolidated net revenue would be approximately R$10,366,909 and the net profit of the six month period ended on June 30, 2009 would be approximately R$18,297.

Page: 8 3

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The pro forma amounts were determined considering the results generated from January 1, 2009 through June 30, 2009 deducted by the amortization of fair value amounts allocated to assets and liabilities as if they occurred on January 1, 2009.

For pro forma purposes, fair values were considered the same as calculated on the date of acquisition.

The business combination with Sadia is still being reviewed by the Administrative Council for Economic Defense (“CADE"). On July 7, 2009, the Management of the Company and of Sadia entered into a Transaction Reversibility Preservation Agreement ("APRO") for the purpose of ensuring the reversibility of the operation until the final decision to be stated by CADE, by means of actions that maintain the competition during the assessment of the competitive effects of the merger. The results of Sadia was consolidated as from the date of the merger.

The quarterly information for the six month period ended on June 30, 2010 does not reflect impacts on possible corporate reorganizations, which can only be assessed after the approval by CADE.

On June 29, 2009, the Commission of the European Communities (European antitrust authority) approved the transaction.

On September 19, 2009, CADE authorized the coordination of the activities of the Companies aimed for the foreign market in the segment of in natura meat.

On January 20, 2010, CADE authorized the Company and its subsidiary Sadia to carry out joint transactions pertaining to the acquisition of unprocessed bovine meat and sale of the output of unprocessed meat in general, in Brazil and abroad, and the negotiation and acquisition of inputs and services.

As disclosed in the Relevant Fact notice of June 30, 2010, the Economic Monitoring Office ( “SEAE”), of the Ministry of Finance, published the opinion that deals with the corporate transaction involving the Company and its subsidiary Sadia, and recommended to CADE that the merger should be approved with restriction, suggesting two alternatives that could be accepted by CADE or not.

In connection with the association between Sadia and the Company, there was a primary public distribution of 115,000,000 shares with a supplementary lot of 17,250,000.

Page: 8 4

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

7. C ASH AND CASH EQUIVALENTS

BR GAAP BR GAAP and IFRS
Average Parent Company Consolidated
rate p.a. % 06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Cash and bank accounts:
U.S. Dollar - 100 - - 49,780 46,256 -
Brazilian Reais - 22,381 29,664 14,878 33,342 40,258 65,633
Euro - - - - 729 5,935 11,914
Others - - - 1,779 1,175 898
22,481 29,664 14,878 85,630 93,624 78,445
Highly liquid investments:
In Brazilian Reais:
Investment fund 11.11% 9,153 8,718 3,700 9,153 8,718 44,900
9,153 8,718 3,700 9,153 8,718 44,900
In U.S. Dollar:
Interest bearing account 0.15% 9,064 19,533 8,275 248,969 497,006 409,941
Fixed term deposit 0.91% 137,857 141,923 2,735 1,174,820 1,198,662 559,738
Overnight 0.06% 20,480 23,596 - 130,643 100,230 140,431
In Euro:
Deposit account 0.33% - - - 74,916 - -
Fixed term deposit 0.49% - - - 110,239 - -
Overnight 0.25% - - - 4,938 - -
Other currencies:
Deposit account 0.88% - - - 5,300 - -
167,401 185,052 11,010 1,749,825 1,795,898 1,110,110
199,035 223,434 29,588 1,844,608 1,898,240 1,233,455

Financial investments classified as cash and cash equivalents are considered financial assets with the possibility of immediate redemption and are subject to an insignificant risk of change of value. Financial investments in foreign currencies refer mainly to Overnight and Time Deposit, remunerated at the prefixed rate.

Page: 8 5

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

8. MARKETABLE SECURITIES

Average BR GAAP BR GAAP and IFRS
WAMT interest Parent company Consolidated
(*) Currency rate p.a.% 06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Available for sale:
Bank deposit certificates (a) - R$ 10.16% - - - 48,274 64,482 -
Brazilian foreign debt securities (b) 2.70 US$ 10.23% - - - 60,333 59,077 82,297
Brazilian financial treasury bill (d) - R$ 8.65% - - - 162,266 215,090 -
Exclusive investment funds (g) - US$ - - - - 50,601 51,413 -
Investment funds (c) - R$ 10.12% - - 102,759 151,664 -
Shares - R$ - 1,770 1,991 - 1,770 1,991
1,770 1,991 - 426,003 543,717 82,297
Trading securities:
Bank deposit certificates (a) 0.62 R$ 10.07% 868,152 517,487 42,010 870,038 2,154,592 660,144
Financial treasury bills (d) 4.58 R$ 10.16% 423,075 100,390 - 423,075 100,390 -
1,291,227 617,877 42,010 1,293,113 2,254,982 660,144
Held to maturity:
Credit linked notes (e) 3.54 US$ 5.03% - - - 180,200 174,189 -
National treasury certificates (f ) 10.04 R$ 12.00% - - - 54,545 49,295 -
Capitalization security 0.08 R$ 5.19% 27 27 263 27 27 263
27 27 263 234,772 223,511 263
1,293,024 619,895 42,273 1,953,888 3,022,210 742,704
Total current 1,293,024 619,895 42,118 1,385,927 2,345,529 742,549
Total non-current - - 155 567,961 676,681 155

(*) Weighted average maturity in years.

(a) Bank deposit certificate (“CDB”) investments are denominated in Brazilian Reais and remunerated at rates varying from 98% to 104% of the CDI.

(b) Brazilian foreign debt securities are denominated in Brazilian Reais and remunerated by pre- and post-fixed rates.

(c) The foreign currency investment fund has a credit linked note issued by a first-class bank that pays periodic interest (LIBOR + spread) and contemplates the Brazil risk and Sadia risk.

(d) Financial treasury bills (“LFT”) are remunerated at the rate of the Special System for Settlement and Custody (“SELIC”).

(e) The credit linked note is a structured operation with a first-class financial institution abroad that pays periodic interest (LIBOR + spread) and corresponds to a credit note that contemplates the Company’s risk.

(f) The national treasury certificates and financial treasury bills classified in the held to maturity subgroup are pledged as a guarantee of the loan obtained by means of the Special Program for Asset Recovery (“PESA”), see note 20.2.

(g) The portfolio of financial operations of exclusive fund in foreign currency is

Page: 8 6

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

shown below:

BR GAAP and IFRS
Consolidated
06.30.10 12.31.09
Structured notes 48,336 48,970
Money market 2,272 1,931
Other assets - 512
50,608 51,413
Other accounts payable (7) -
50,601 51,413

On June 30, 2010, of the total investments, R$36,070 were given as guarantees for U.S. Dollar future contracts in the Future and Commodities Exchange (“BM&F”). On December 31, 2009, guarantees amounted R$39,000.

On June 30, 2010, the maturities of the financial investments from non-current assets in the consolidated balance sheet have the following composition:

BR GAAP and IFRS
Maturities Consolidated
2011 77,841
2012 60,983
2013 238,689
2014 116,223
2015 onwards 74,225
567,961

The Company conducted an analysis of sensitivity to foreign exchange rate (note 4.10).

Page: 8 7

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

9. TRADE ACCOUNTS RECEIVABLE AND OTHER

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Current
Local third-parties 735,572 713,352 236,936 1,240,699 1,514,608 683,488
Local related parties 11,670 19,789 45,569 5,023 (282) -
Foreign third parties 69,900 32,683 27,788 1,204,079 662,622 705,638
Foreign related parties 300,053 717,925 1,238 - - -
(-) Estimated losses with doubtful accounts (17,045) (19,013) (3,237) (26,431) (36,247) (11,080)
1,100,150 1,464,736 308,294 2,423,370 2,140,701 1,378,046
Credit notes 34,901 33,467 26,897 47,330 33,217 48,746
34,901 33,467 26,897 47,330 33,217 48,746
1,135,051 1,498,203 335,191 2,470,700 2,173,918 1,426,792
Non-current
Local third-parties 43,967 32,166 6,203 44,135 42,707 29,175
Foreign third parties 479 2,894 - 12,883 3,688 2,853
(-) Adjustment to present value (992) (1,155) - (992) (1,155) (347)
(-) Estimated losses with doubtful accounts (28,713) (23,418) (2,874) (41,285) (32,432) (20,103)
14,741 10,487 3,329 14,741 12,808 11,578
Credit notes 77,058 92,620 16,157 77,058 92,620 54,889
77,058 92,620 16,157 77,058 92,620 54,889
91,799 103,107 19,486 91,799 105,428 66,467

The rollforward of estimated losses from doubtful accounts are presented below:

BR GAAP — Parent company BR GAAP and IFRS — Consolidated
06.30.10 12.31.09 06.30.10 12.31.09
Beginning balance 42,431 6,111 68,679 31,183
Exchange variation 239 (623) 223 (651)
Provision 6,530 23,442 9,951 38,714
Increase (business combination) - - - 17,011
Increase (takeover) 3,183 24,116 - -
Reversal (678) (3,321) (5,109) (7,883)
Write-off (5,947) (7,294) (6,028) (9,695)
Ending balance 45,758 42,431 67,716 68,679

The expense of the estimated losses on doubtful accounts was recorded under selling expenses in the statement of income. When efforts to recover accounts receivable prove fruitless, the amounts credited to estimated losses on doubtful accounts are generally reversed against the permanent write-off of the invoice.

The breakdown of accounts receivable aging list is as follows:

Page: 8 8

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Amounts falling due 1,085,151 1,467,674 260,790 2,230,196 2,002,421 963,387
Overdue:
From 01 to 60 days 27,456 9,269 34,632 196,168 137,940 288,171
From 61 to 120 days 3,176 1,761 12,255 7,188 11,895 116,925
From 121 to 180 days 3,031 1,512 3,290 8,431 7,861 19,129
From 181 to 360 days 4,339 3,533 564 13,546 16,831 5,356
Above 360 days 38,488 35,060 6,203 51,290 46,395 28,186
(-) Adjustment to present value (992) (1,155) - (992) (1,155) (347)
(-) Estimated losses with doubtful accounts (45,758) (42,431) (6,111) (67,716) (68,679) (31,183)
1,114,891 1,475,223 311,623 2,438,111 2,153,509 1,389,624

10. INVENTORIES

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Finished goods 504,488 575,190 96,397 1,224,006 1,376,002 935,553
Goods for resale 1,515 2,834 - 18,396 15,991 2,317
Work in process 51,361 55,804 16,451 83,798 120,432 41,082
Raw materials 101,478 145,496 32,144 426,213 496,831 116,457
Packging materials 36,203 34,711 13,300 85,360 90,359 51,817
Secondary materials 56,413 64,812 29,430 57,300 56,098 76,767
Warehouse 67,121 62,207 18,713 106,650 121,374 85,457
Goods in transit 882 3,568 - 9,595 11,356 -
Imports in transit 14,111 13,655 210 16,746 19,454 15,872
Advances to suppliers 2,032 2,026 5,668 41,376 37,679 7,821
(-) Provision for adjustment to market value (19,403) (35,448) (4,865) (37,476) (68,955) (35,254)
(-) Provision for inventory losses deteriorated (5,536) (4,545) (239) (25,814) (17,746) (10,323)
(-) Provision for obsolescence (725) (512) (1,405) (3,515) (3,378) (2,195)
809,940 919,798 205,804 2,002,635 2,255,497 1,285,371

The amount of the write-offs of inventories recognized in the cost of sales on for the six month period ended on June 30, 2010 totaled R$4,252,954 at the parent company and R$8,103,982 in the consolidated quarterly information (on June 30, 2009 R$3,267,482 at the parent company and R$4,323,684 in the consolidated quarterly information), whereas this amount involves the additions and reversals of inventory reductions to net realizable value presented in the table below:

BR GAAP
Parent company
01.01.09 Additions Reversals Write-offs 12.31.09
Provision for inventory losses (a) (4,865) (30,583) - - (35,448)
Provision for inventory losses deteriorated (239) (7,703) 3,333 64 (4,545)
Provision for obsolescence (1,405) (2,536) - 3,429 (512)
(6,509) (40,822) 3,333 3,493 (40,505)

Page: 8 9

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP
Parent company
12.31.09 Additions Reversals Write-offs 06.30.10
Provision for inventory losses (a) (35,448) (12,000) 28,045 - (19,403)
Provision for inventory losses deteriorated (4,545) (4,038) 2,857 190 (5,536)
Provision for obsolescence (512) (410) - 197 (725)
(40,505) (16,448) 30,902 387 (25,664)
BR GAAP and IFRS
Consolidated
Business Exchange
01.01.09 combination Additions Reversals Write-offs rate variation 12.31.09
Provision for inventory losses (a) (35,254) (10,264) (28,056) 250 - 4,369 (68,955)
Provision for inventory losses deteriorated (10,323) (3,196) (22,341) 5,883 12,231 - (17,746)
Provision for obsolescence (2,195) (3,004) (2,853) 453 4,221 - (3,378)
(47,772) (16,464) (53,250) 6,586 16,452 4,369 (90,079)
BR GAAP and IFRS
Consolidated
Exchange
12.31.09 Additions Reversals Write-offs rate variation 06.30.10
Provision for inventory losses (a) (68,955) (23,358) 38,186 15,553 1,098 (37,476)
Provision for inventory losses deteriorated (17,746) (14,668) 6,410 190 - (25,814)
Provision for obsolescence (3,378) (507) 173 197 - (3,515)
(90,079) (38,533) 44,769 15,940 1,098 (66,805)

(a) Reversals occurred on account of the recovery of the sale price of inventories.

Additionally, on June 30, 2010 there were write-offs of inventories in the amount of R$10,837 at the parent company and R$12,379 in the consolidated quarterly information (on June 30, 2009, R$6,841 at the parent company and R$7,321 in the consolidated quarterly information), recorded under selling expenses referring to deteriorated items.

Management expects inventories to be recovered in a period of less than 12 months.

11. BIOLOGICAL ASSETS

The group of biological assets of the Company is composed of living animals separated by the categories: poultry, pork and bovine. These animals were separated into consumable and for production.

The animals classified in the subgroup of consumables are those intended for slaughtering to produce unprocessed meat and/or manufactured and processed products, while they do not reach the weight adequate for slaughtering, they are

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FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

considered to be immature. The processes of slaughtering and production occur in sequence over a very short time period, and so only the living animals transferred for slaughtering in refrigerators are classified as mature.

The animals classified in the subgroup of production (matrixes) are those that have the function of producing other biological assets; while they do not reach the age of reproduction they are classified as immature, and when they are able to initiate the reproductive cycle, they are classified as mature.

In the measurement of the biological assets at fair value, the Company adopted the model of discounted cash flow. At first, the rate of discount used was the weighted average cost of capital (“WACC”), which was then adjusted to reflect the specific risk of the asset in question, by means of a mathematical model of average return on assets (“WARA”), as follows:

12.31.09 01.01.09
Cost of nominal owners' equity 11.54 12.37
Projected inflation rate USA 1.99 2.27
Cost of actual owners' equity 9.37 9.88
Actual WACC 6.94 6.83
WARA discount rate:
Animals for slaughter 5.75 6.10
Animals for production 7.30 6.70

In the opinion of the Management, the fair value of the biological assets is substantially represented by the cost of formation especially due to the short life cycle of the animals and due to the fact that a significant portion of the profitability of our products derives from the manufacturing process, not from the obtainment of unprocessed meat (raw materials / slaughter). This opinion is supported by a report of appraisal of fair value prepared by an independent specialist, which assessed an immaterial difference between the two methodologies. Therefore, the Management maintained the measurement of biological assets at formation cost.

During the first quarter Management has not identified any events that could have changed business conditions, therefore, the appraisal report issued for December 31, 2009, was not updated.

The quantities and the accounting balances per category of biological asset are presented below:

Page: 9 1

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP
Parent company
06.30.10 12.31.09 01.01.09
Quantity Value Quantity Value Quantity Value
Consumable biological assets:
Immature poultry 92,851 155,609 82,260 168,838 19,796 28,367
Immature pork 1,811 211,496 1,818 218,928 616 50,562
Immature beef 21 23,256 14 14,038 2 1,827
Total current 94,683 390,361 84,092 401,804 20,414 80,756
Production biological assets:
Immature poultry 3,651 39,442 3,378 44,526 839 10,962
Mature poultry 5,109 55,520 4,398 54,301 1,252 15,044
Mature pork 147 55,252 152 54,627 38 3,844
Total non-current 8,907 150,214 7,928 153,454 2,129 29,850
103,590 540,575 92,020 555,258 22,543 110,606
BR GAAP and IFRS
Consolidated
06.30.10 12.31.09 01.01.09
Quantity Value Quantity Value Quantity Value
Consumable biological assets:
Immature poultry 182,747 353,256 166,872 352,609 88,827 202,555
Mature poultry 668 1,922 1,012 4,101 - -
Immature pork 3,678 472,143 3,960 493,592 1,413 222,992
Mature pork 2 470 5 1,187 - -
Immature beef 21 23,255 14 14,038 2 1,827
Total current 187,116 851,046 171,863 865,527 90,242 427,374
Production biological assets:
Immature poultry 7,224 91,154 7,275 99,035 3,707 49,699
Mature poultry 11,877 140,299 11,260 130,908 5,094 61,062
Immature pork 164 23,186 173 26,306 - -
Mature pork 369 120,845 381 134,943 144 48,085
Total non-current 19,634 375,484 19,089 391,192 8,945 158,846
206,750 1,226,530 190,952 1,256,719 99,187 586,220

The rollforward of biological assets for the fiscal year ended on January 1, 2009 and for the six month period ended June 30, 2010 are presented below:

Page: 9 2

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP
Parent company
Current Non-current
Poultry Pork Beef Total Poultry Pork Total
Balance as of 01.01.09 28,367 50,562 1,827 80,756 26,006 3,844 29,850
Increase by acquisition 43,176 308,229 28,320 379,725 11,322 73,029 84,351
Increase by reproduction 388,762 121,676 - 510,438 225,668 - 225,668
Consumption of ration, medication and remuneration of
partnership, net of accumulated depreciation 1,485,344 512,152 - 1,997,496 (33,473) - (33,473)
Transfer between current and non-current assets 130,695 22,247 - 152,942 (130,696) (22,246) (152,942)
Reduction due to slaughtering (1,907,506) (795,938) (16,109) (2,719,553) - - -
Balance as of 12.31.09 168,838 218,928 14,038 401,804 98,827 54,627 153,454
Increase by acquisition 24,398 169,259 23,793 217,450 7,136 16,683 23,819
Increase by reproduction 201,896 18,311 - 220,207 60,523 - 60,523
Consumption of ration, medication and remuneration of
partnership, net of accumulated depreciation 711,937 234,586 - 946,523 (10,906) - (10,906)
Transfer between current and non-current assets 60,618 16,058 - 76,676 (60,618) (16,058) (76,676)
Reduction due to slaughtering (1,012,078) (445,646) (14,575) (1,472,299) - - -
Balance as of 06.30.10 155,609 211,496 23,256 390,361 94,962 55,252 150,214
BR GAAP and IFRS
Consolidated
Current Non-current
Poultry Pork Beef Total Poultry Pork Total
Balance as of 01.01.09 202,555 222,992 1,827 427,374 110,761 48,085 158,846
Business combination 205,346 298,068 - 503,414 111,289 109,008 220,297
Increase by acquisition 46,821 358,362 28,320 433,503 22,122 34,292 56,414
Increase by reproduction 621,724 300,414 - 922,138 236,419 20,439 256,858
Consumption of ration, medication and remuneration of
partnership, net of accumulated depreciation 2,732,448 834,240 - 3,566,688 (71,892) (15,170) (87,062)
Transfer between current and non-current assets 178,754 35,405 - 214,159 (178,756) (35,405) (214,161)
Reduction due to slaughtering (3,630,938) (1,554,702) (16,109) (5,201,749) - - -
Balance as of 12.31.09 356,710 494,779 14,038 865,527 229,943 161,249 391,192
Increase by acquisition 46,738 169,259 23,793 239,790 14,333 17,749 32,082
Increase by reproduction 1,310,477 541,412 - 1,851,889 129,968 19,683 149,651
Consumption of ration, medication and remuneration of
partnership, net of accumulated depreciation 700,285 234,586 - 934,871 (10,906) - (10,906)
Transfer between current and non-current assets 122,938 45,727 - 168,665 (122,938) (45,728) (168,666)
Reduction due to slaughtering (2,181,970) (1,013,150) (14,576) (3,209,696) (8,947) (8,922) (17,869)
Balance as of 06.30.10 355,178 472,613 23,255 851,046 231,453 144,031 375,484

The costs of the breeding animals are depreciated using the straight-line method for a period from 15 to 30 months.

The acquisitions of biological assets of (non-current) production occur when there is the expectation that the production plan cannot be met with its own assets and, as a rule, this is the acquisition of immature animals in the beginning of the life cycle.

The acquisitions of biological assets for slaughtering (poultry and pork) are represented by poultry of one day and pork of up to 22 kilos, which are subject to the management of a substantial part of the agricultural activity by the Company.

The increase by reproduction of the biological assets classified in the current assets is related to eggs from assets of production.

Page: 9 3

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

12. ASSETS HELD FOR SALE

The Board of Directors of the Company, on February 19, 2010, approved a plan of disposal of assets that were not being used in the operations.

The balances rollforward are presented below:

BR GAAP
Parent company
Transfers of Transfers of
property, plant property, plant
01.01.09 and equipments Write-offs 12.31.09 and equipments Write-offs 06.30.10
Land 813 780 (1,150) 443 5,204 (5,450) 197
Buildings and improvements 21 436 (441) 16 3,163 (2,685) 494
Machinery and equipment 1,407 385 (427) 1,365 2,744 (3,755) 354
Others - 179 - 179 311 (451) 39
2,241 1,780 (2,018) 2,003 11,422 (12,341) 1,084
BR GAAP and IFRS
Consolidated
Transfers of Transfers of
property, plant Business property, plant
01.01.09 and equipments combination Write-offs 12.31.09 and equipments Write-offs 06.30.10
Land 813 780 348 (1,150) 791 5,204 - 5,995
Buildings and improvements 28 436 44,487 (448) 44,503 3,163 - 47,666
Machinery and equipment 4,813 385 1,053 (3,833) 2,418 2,956 (889) 4,485
Others 116 179 - (116) 179 311 - 490
5,770 1,780 45,888 (5,547) 47,891 11,634 (889) 58,636

The balance is substantially represented by the houses built in the city of Lucas do Rio Verde, in the State of Mato Grosso.

13. R ECOVERABLE TAXES

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
ICMS 245,869 167,899 92,110 634,818 600,734 225,163
Income and social contribution taxes 181,941 168,675 62,325 204,463 208,738 148,500
PIS/COFINS 453,591 386,332 315,100 617,449 623,037 358,990
Import duty 95 - - 12,565 11,867 25,043
IPI 3,567 3,455 3,062 47,171 47,174 5,617
Other 831 836 - 3,340 7,620 1,930
(-) Provision for losses (22,014) (39,085) (24,345) (81,482) (100,505) (41,416)
863,880 688,112 448,252 1,438,324 1,398,665 723,827
Total current 404,999 256,994 337,231 802,049 745,591 576,337
Total non-current 458,881 431,118 111,021 636,275 653,074 147,490

The rollforward of provisions are presented below:

Page: 9 4

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP
Parent company
Merger of Merger of
01.01.09 company Reversals 12.31.09 company Reversals Write-offs 06.30.10
Provision for ICMS loss (22,014) - - (22,014) - - - (22,014)
Provision for IR/CS loss - (17,071) - (17,071) - 11,897 5,174 -
Provision for PIS/COFINS loss - - - - (4,744) 4,744 - -
Provision for IPI loss (2,331) - 2,331 - - - -
(24,345) (17,071) 2,331 (39,085) (4,744) 16,641 5,174 (22,014)
BR GAAP and IFRS
Consolidated
Business
01.01.09 combination Additions Reversals 12.31.09 Additions Reversals Write-offs 06.30.10
Provision for ICMS loss (22,014) (39,449) (10,847) 2,285 (70,025) (2,792) - - (72,817)
Provision for IR/CS loss (17,071) (1,541) - - (18,612) - 11,897 5,174 (1,541)
Provision for PIS/COFINS loss - (2,567) (4,744) - (7,311) - 4,744 - (2,567)
Provision for IPI loss (2,331) (2,426) (2,131) 2,331 (4,557) - - - (4,557)
(41,416) (45,983) (17,722) 4,616 (100,505) (2,792) 16,641 5,174 (81,482)

13.1. ICMS – Value-added Tax

Due to its export activity, domestic sales and investments in fixed assets are subject to reduced tax rates and, the Company accumulates credits that are offset with debits generated in sales in the domestic market or transferred to third parties.

The Company has ICMS credit in the states of Mato Grosso do Sul, Paraná, Santa Catarina, Minas Gerais and Rio Grande do Sul, for which Management understands that realization is uncertain and, therefore, formed full provision for loss of these credits as shown in the table above.

13.2. Income tax and social contribution

These correspond to withholdings at source on financial investments, prepayments of income tax and social contribution, and on the reception of interest on shareholders’ equity by the parent company, realizable through offsetting with federal taxes and contributions payable.

13.3. PIS and COFINS

PIS (“Contribution to the Social Integration Program”) and COFINS (“Contribution for Funding of Social Welfare Programs”) basically originate from credits on purchases of raw materials used in the production of exported products or of products whose sale is taxed at the zero rate, such as those of UHT and pasteurized milk and sales to the Manaus Trade Free Zone. The recovery of these receivables can be achieved by means of offsetting with domestic sale operations of taxed products, with other federal taxes or compensation claims.

For the accumulated PIS and COFINS credits, the Company adopts the procedure

Page: 9 5

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

of legal action aimed at accelerating the analysis process of applications for repayment of these contributions already filed, which are under supervision for the release of new amounts.

The management has been conducting studies for the development of plans that allow the use of the other credits in the operations and there is no expectation of losses in their recovery.

14. INCOME TAX AND SOCIAL CONTRIBUTION

14.1. Deferred income tax and social contribution composition :

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Assets:
Tax losses carryforwards (corporate income tax) 201,783 129,130 105,664 631,515 568,651 206,952
Negative calculation basis (social contribution on net profits) 75,445 48,272 38,081 235,476 211,194 74,032
Temporary differences:
Provisions for contingencies 57,115 49,292 36,990 133,292 90,484 64,222
Provision for doubtful accounts 3,141 3,219 5,235 7,999 9,144 6,899
Provision for attorney's fees 4,873 4,608 2,882 8,145 9,804 3,390
Provision for property, plant and equipment losses 2,416 2,416 - 7,002 7,027 -
Provision for tax credits realization 7,485 7,485 8,268 39,752 53,963 8,268
Provision for other obligations 10,039 17,609 1,537 27,115 17,609 1,537
Employees' profit sharing 13,451 640 3,522 14,501 17,407 4,930
Provision for inventories 8,726 13,771 1,921 8,976 15,374 10,029
Employees' benefits plan 39,294 36,027 28,637 90,769 72,234 28,637
Amortization of fair value of business combination 7,363 8,440 10,636 11,986 14,480 10,636
Business combination - Sadia - - - 1,139,214 1,148,995 -
Provision for contractual indemnity - - - 150 3,552 17,275
Unrealized losses on derivatives 4,009 - - 4,009 - 17,308
Unrealized losses on inventories - - - 3,700 4,765 13,912
Adjustments relating to the transition tax regime 97,945 98,438 8,739 114,913 167,671 79,262
Provision for losses 5,442 5,209 - 5,442 5,209 -
Other temporary differences 7,176 3,363 1,078 13,250 8,849 3,545
545,703 427,919 253,190 2,497,206 2,426,412 550,834
Liabilities:
Temporary differences:
Revaluation reserve 2,014 3,204 - 2,014 3,205 -
Depreciation on rural activities 490 517 44,889 89,254 94,206 64,163
Provision for interest - Law nº 12.249 article 25 - - - 5,773 - -
Adjustments relating to the transition tax regime 185,521 119,952 933 280,797 185,943 4,365
Business combination - Sadia - - - 1,146,140 1,164,477 -
Unrealized gains on derivatives 9,913 7,564 3,360 9,913 7,565 3,360
Other temporary differences - - 1,325 3,226 1,029 1,434
197,938 131,237 50,507 1,537,117 1,456,425 73,322

14.2. Estimated time of realization :

Deferred tax assets related to provisions for contingencies will be realized as the lawsuits are resolved and there are no estimates for the expected time of

Page: 9 6

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

realization; thus, they are classified as non-current. The Company considers that deferred tax assets resulting from temporary differences of employee benefits will be realized at the payment of the projected obligations.

The deferred tax assets originating from tax losses carryforward and negative basis of social contribution are expected to be realized as set forth below:

BR GAAP BR GAAP e IFRS
Parent company Consolidated
Year Value Value
2010 18,050 37,220
2011 36,795 70,907
2012 37,576 81,069
2013 38,406 95,822
2014 39,301 106,785
2015 107,100 475,188
277,228 866,991

In assessing the likelihood of the realization of deferred tax assets, Management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected taxable income and tax-planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income, management believes that it is more likely than not that the Company will realize the benefits of these deductible differences. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

Page: 9 7

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

14.3. Income and social contribution taxes reconciliation :

BR GAAP — Parent company BR GAAP and IFRS — Consolidated
06.30.10 06.30.09 06.30.10 06.30.09
Income (loss) before taxes and participations 160,273 (64,464) 262,247 68,694
Nominal tax rate 34.0% 34.0% 34.0% 34.0%
(54,493) 21,918 (89,164) (23,356)
Tax (expense) benefit at nominal rate
Adjustment of taxes and contributions on:
Equity pick-up 139,575 (48,662) 284 -
Exchange rate variation on foreign investments (39,053) (27,581) (20,765) (53,647)
Difference of tax rates on foreign earnings from subsidiaries - - 54,825 20,200
Interest on shareholders' equity 18,088 - 18,088 -
Profit sharing (1,544) (1,220) (1,874) (1,232)
Donations (209) (135) (210) (202)
Penalties (177) (1,508) (180) (1,588)
Other adjustments 10,110 37,688 8,141 (92,590)
72,297 (19,500) (30,855) (152,415)
Current income tax 2,728 (18,232) (28,483) (20,924)
Deferred income tax 69,569 (1,268) (2,372) (131,491)

The taxable income, current and deferred income tax from subsidiaries abroad is presented below:

BR GAAP and IFRS
Consolidated
06.30.10 06.30.09
Pre-tax book income from foreign subsidiaries 73,186 57,465
Current income taxes benefit (expense) of subsidiaries abroad (7,424) 662
Deferred income taxes benefit (expense) of subsidiaries abroad (461) -

The Company determined that the total profit recorded in the books of its wholly-owned subsidiary Crossban will not be redistributed. Such resources will be used for investments in the subsidiary, and thus no deferred income taxes were recognized. The total of undistributed earnings corresponds to R$905,525 as of June 30, 2010 (R$898,168 as of December 31, 2009).

As a result of the merger of the wholly-owned subsidiary Perdigão Agroindustrial S.A. on March 9, 2009, the Company recorded a loss of R$132,036 related to deferred tax assets (associated to tax losses carryforward and negative base of social contribution).

The Brazilian income tax returns are subject to a 5-year statute of limitation period, during which the tax authorities might audit and assess the company for additional

Page: 9 8

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

taxes and penalties, in case inconsistencies are found. Subsidiaries located abroad are taxed in their respective jurisdictions, according to local regulations.

15. JUDICIAL DEPOSITS

These represent restricted assets of the Company and are restricted to sums deposited and held in escrow pending deliberation of the disputes to which they are related.

The rollforward of the judicial deposits are represented below:

BR GAAP
Parent company
Merger of
01.01.09 company Additions Reversals Write-offs 12.31.09
Tax 8,096 2,588 505 (54) - 11,135
Labor 13,354 23,973 18,861 (5,980) (10,543) 39,665
Civil, commercial and others 4,843 1,057 4,621 - - 10,521
26,293 27,618 23,987 (6,034) (10,543) 61,321
BR GAAP
Parent company
Merger of
12.31.09 company Additions Reversals Write-offs 06.30.10
Tax 11,135 92 6,908 (50) - 18,085
Labor 39,665 747 11,082 (8,139) (3,034) 40,321
Civil, commercial and others 10,521 - 6,558 (192) (6) 16,881
61,321 839 24,548 (8,381) (3,040) 75,287

The variation of the balance in the year 2009 occurred due to the merger of the wholly-owned subsidiary Perdigão Agroindustrial S.A. on March 9, 2009, while the increase in the year 2010 was mainly due to the regularization of the balance of labor contingencies of Eleva Alimentos S.A.

BR GAAP and IFRS
Consolidated
Business Exchange
01.01.09 combination Additions Reversals Write-offs rate variation 12.31.09
Tax 12,542 51,427 3,986 (1,887) (13,030) - 53,038
Labor 36,208 20,085 31,940 (7,979) (11,955) - 68,299
Civil, commercial and others 7,343 2,523 5,297 - (195) (420) 14,548
56,093 74,035 41,223 (9,866) (25,180) (420) 135,885

Page: 9 9

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP and IFRS
Consolidated
Exchange
12.31.09 Additions Reversals Write-offs rate variation 06.30.10
Tax 53,038 21,132 (3,592) - - 70,578
Labor 68,299 19,662 (11,155) (3,035) - 73,771
Civil, commercial and others 14,548 8,258 (1,193) (508) (13) 21,092
135,885 49,052 (15,940) (3,543) (13) 165,441

The increase of the balance of the year 2009 results from the business combination with Sadia.

16. INVESTMENTS

16.1. Investment breakdown

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Investment in subsidiaries 4,567,386 5,356,237 2,708,068 12,970 16,138 -
Fair value of acquired assets, net 2,418,908 2,435,517 - - - -
Goodwill based on the expectation of future profitability 1,293,818 1,293,818 - - - -
Advance for future capital increase - 20,577 - - - -
Other investments 834 834 577 1,026 1,062 1,028
8,280,946 9,106,983 2,708,645 13,996 17,200 1,028

16.2. Movement of the direct investments – Parent Company

PSA Labor. Veter.Ltda. PDF Participações Ltda. Perdigão Trading S.A. UP! Alimentos Ltda. HFF Partici pações S.A. Sadia S.A. Avipal Nordeste S.A. VIP S.A. Empr. E Particip. Imob.
a) Capital share June 30, 2010
% of share 88.00% 1.00% 100.00% 50.00% - 100.00% - 100.00%
Total number of shares and membership interests: 5,363,850 1,000 100,000 1,000 - 683,000,000 - 10,177,028
Number of shares and membership interest held: 4,720,188 10 100,000 500 - 683,000,000 - 10,177,028
b) Information of controlling companies on June 30, 2010
Capital stock 5,464 1 100 1 - 4,973,817 - 26,235
Shareholders' equity 10,501 1 1,821 3,603 - 3,745,544 - 35,143
Result of the period 967 - 651 3,602 - 237,258 - 8,293
c) Balance of investments on June 30, 2010
Balance of the investment in the beginning of the year 407 - 1,170 4,003 233,357 6,154,594 1,767,156 23,830
Equity method 223 - 651 1,801 31,251 236,587 18,695 8,293
Unrealized profit in inventory - - - - - - - -
Treasury shares - - - - - 1,413 - -
Exchange rate variation - - - - - - - -
Other comprehensive income - - - - - (19,760) - -
Capital increase 8,610 - - - - 713,816 - 3,020
Business combination - - - - - (16,609) - -
Transfer of indirect investment to direct investment - - - - - - - -
Dividends and interest on the shareholders’ equity - - - (4,003) - - - -
Net assets merged spin-off - - - - - - - -
Merger - - - - (264,608) 250,476 (1,785,851) -
Balance of investments on June 30, 2010 9,240 - 1,821 1,801 - 7,320,517 - 35,143

Page: 100

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Avipal Centro- Oeste S.A. Avipal Construtora S.A. Establec. Levino Zaccardy Crossban Holdings GMBH Perdigão Export Ltd. Total — 06.30.10 12.31.09 01.01.09
a) Capital share June 30, 2010
% of share 100.00% 100.00% 90.00% 100.00% 100.00% - - -
Total number of shares and membership interests: 6,963,854 445,362 100 1 1 - - -
Number of shares and membership interest held: 6,963,854 445,362 90 1 1 - - -
b) Information of controlling companies on June 30, 2010
Capital stock 5,972 445 917 4,182 18 - - -
Shareholders' equity 263 50 294 915,600 - - - -
Result of the period 2 1 33 128,228 - - - -
c) Balance of investments on June 30, 2010
Balance of the investment in the beginning of the year 261 49 234 900,511 - 9,085,572 2,708,068 1,831,067
Equity method 2 1 (298) 130,306 - 427,512 256,273 215,029
Unrealized profit in inventory - - - (390) - (390) 24,266 (27,008)
Treasury shares - - - - - 1,413 (26,772) -
Exchange rate variation - - 1 (114,777) - (114,776) (162,068) -
Other comprehensive income - - - (4,310) - (24,070) (76) (33,607)
Capital increase - - - - - 725,446 3,987,366 -
Business combination - - - - - (16,609) 3,729,335 -
Transfer of indirect investment to direct investment - - - - - - 1,200,108 3,597
Dividends and interest on the shareholders’ equity - - - - - (4,003) (48,569) -
Net assets merged spin-off - - - - - - - (38)
Merger - - - - (1,799,983) (2,582,359) 719,028
Balance of investments on June 30, 2010 263 50 (63) 911,340 - 8,280,112 9,085,572 2,708,068

The amounts of the losses resulting from foreign-exchange variation on the investments in subsidiaries abroad, whose functional currency is Brazilian Reais, in the amount of R$60,995 on June 30, 2010 (R$157,786 on June 30, 2009), are recognized in the revenues or financial expenses in the statement of income (note 33). The exchange rate variation resulting from the investment in the subsidiary Plusfood Groep B.V. and its controlled companies, whose functional currency is the Euro, was recorded in the equity evaluation adjustments, in the subgroup of shareholders’ equity.

16.3. Investments in affiliated companies

UP! — 06.30.10 12.31.09 01.01.09 K&S — 06.30.10 12.31.09
Current assets 14,477 16,295 20,972 17,898 20,278
Non-current assets - - 211 13,876 13,798
Current liabilities (10,874) (8,286) (10,271) (8,979) (9,312)
Net assets 3,603 8,009 10,912 22,795 24,764
UP! K&S
06.30.10 06.30.09 06.30.10 06.30.09
Net revenues 55,013 45,988 32,879 -
Net income 3,602 1,693 (1,969) -

On June 30, 2009, the Company and Unilever Brasil, members of UP! Alimentos Ltda, entered into an amendment to the shareholders’ agreement valid as from July

Page: 10 1

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

1, 2009. The members decided to change certain rules of governance of the corporation, thereby conferring on Unilever Brasil certain additional rights and obligations. Therefore, in spite of the maintenance of a share of 50% in UP!, the Company failed to share the control in the investee and, in consequence, started to measure the investment using the equity method, thereby abandoning the practice of proportional consolidation. The consolidated balances presented in the fiscal year ended on January 1, 2009 include the balances of the investee.

K&S Alimentos S.A. results from a joint venture between the subsidiary Sadia and Kraft Foods Brasil and, therefore, became an indirect subsidiary of the Company as from July 8, 2009. For this reason, no comparative balance was presented on January 1, 2009.

17. PROPERTY, PLANT AND EQUIPMENT

The property, plant and equipment rollforward is presented below:

BR GAAP
Parent company
Rate Transfer to
p.a. % 01.01.09 Acquisitions Write-offs Merger (*) Transfers held for sale 12.31.09
Cost
Land - 6 (7,033) 117,024 1,039 (780) 157,516
Buildings and improvements 305,581 3,187 (54,852) 1,050,772 171,113 (929) 1,474,872
Machinery and equipment 574,061 17,505 (98,401) 1,400,731 233,850 (964) 2,126,782
Facilities 89,873 866 (22,980) 145,362 27,666 - 240,787
Furniture 12,383 228 (2,362) 25,540 4,752 (71) 40,470
Vehicles and aircrafts 6,716 485 (2,565) 14,069 1,092 (66) 19,731
Others 5,320 189 (109) 58,310 22,802 - 86,512
Construction in progress 95,068 337,235 (218) 141,965 (326,364) - 247,686
Advances to suppliers 24,346 110,358 - 7,378 (138,717) - 3,365
1,113,348 470,059 (188,520) 2,961,151 (2,767) (2,810) 4,397,721
Depreciation
Buildings and improvements 3.45 (143,774) (32,838) 13,718 (263,934) (9,311) 493 (435,646)
Machinery and equipment 6.33 (358,016) (50,958) 51,546 (580,845) 613 495 (937,165)
Facilities 3.57 (41,658) (4,840) 7,084 (55,343) 10,825 - (83,932)
Furniture 6.25 (6,641) (1,359) 1,348 (11,018) (213) 24 (17,859)
Vehicles and aircrafts 14.29 (5,967) (788) 1,204 (5,840) 726 18 (10,647)
Others 3.00 (2,609) (3,492) 106 (11,731) (3,561) - (21,287)
(558,665) (94,275) 75,006 (928,711) (921) 1,030 (1,506,536)
554,683 375,784 (113,514) 2,032,440 (3,688) (1,780) 2,891,185
(*) Merger of Perdigão Agroindustrial on March 9, 2009.

Page: 10 2

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP
Parent company
Rate Transfer to
p.a. % 12.31.09 Acquisitions Write-offs Merger (*) Transfers held for sale 06.30.10
Cost
Land 157,516 - (1,165) 1,367 388 (5,204) 152,902
Buildings and improvements 1,474,872 82 (7,736) 42,829 93,065 (8,192) 1,594,920
Machinery and equipment 2,126,782 5,142 (18,132) 48,349 131,049 (8,710) 2,284,480
Facilities 240,787 21 (2,102) 4,423 43,454 (1,002) 285,581
Furniture 40,470 229 (755) 2,462 1,522 (315) 43,613
Vehicles and aircrafts 19,731 163 (1,885) 445 888 (12) 19,330
Others 86,512 258 (1,274) 2,567 8,673 - 96,736
Construction in progress 247,686 165,476 (7,895) 417 (282,571) - 123,113
Advances to suppliers 3,365 806 - 58 - - 4,229
4,397,721 172,177 (40,944) 102,917 (3,532) (23,435) 4,604,904
Depreciation
Buildings and improvements 3.45 (435,646) (22,695) 1,184 (10,293) (1,494) 5,029 (463,915)
Machinery and equipment 6.32 (937,165) (46,094) 16,970 (15,998) (1,675) 5,966 (977,996)
Facilities 3.57 (83,932) (4,482) 644 (797) 124 743 (87,700)
Furniture 6.25 (17,859) (1,118) 599 (728) (58) 263 (18,901)
Vehicles and aircrafts 14.29 (10,647) (3,174) 1,443 (255) 2,414 12 (10,207)
Others 3.00 (21,287) (3,176) 1,473 (137) (7) - (23,134)
(1,506,536) (80,739) 22,313 (28,208) (696) 12,013 (1,581,853)
2,891,185 91,438 (18,631) 74,709 (4,228) (11,422) 3,023,051
(*) Merger of Avipal Nordeste S.A. on March 31, 2010.
BR GAAP and IFRS
Consolidated
Rate Business Transfer to Exchange
p.a.% 01.01.09 Acquisitions Write-offs combination Transfers held for sale rate variation 12.31.09
Cost
Land 166,866 36 (7,084) 514,425 1,191 (780) (158) 674,496
Buildings and improvements 1,404,537 8,822 (55,054) 2,780,204 252,171 (929) (7,845) 4,381,906
Machinery and equipment 2,091,183 39,959 (116,726) 2,632,180 440,344 (964) (17,371) 5,068,605
Facilities 242,179 2,831 (193,092) 1,076,974 115,044 - (9,458) 1,234,478
Furniture 47,348 1,407 (5,577) 28,199 9,615 (71) (2,371) 78,550
Vehicles and aircrafts 22,092 913 (3,522) 13,396 952 (66) (836) 32,929
Others 62,425 4,952 (3,764) 56,267 27,210 - (205) 146,885
Construction in progress 250,489 472,337 (218) 475,659 (769,730) - (3,753) 424,784
Advances to suppliers 30,470 113,217 (17,715) 37,446 (137,985) - (751) 24,682
4,317,589 644,474 (402,752) 7,614,750 (61,188) (2,810) (42,748) 12,067,315
Depreciation
Buildings and improvements 2.95 (428,909) (49,340) 19,242 (487,623) (12,562) 493 5,053 (953,646)
Machinery and equipment 5.20 (994,094) (56,794) 55,827 (865,008) (2,127) 495 12,464 (1,849,237)
Facilities 3.39 (96,682) 3,473 14,891 (253,968) 19,187 - (2,308) (315,407)
Furniture 5.43 (24,785) (3,707) 3,804 (15,001) (603) 24 1,602 (38,666)
Vehicles and aircrafts 14.57 (12,203) (1,627) 1,848 (6,483) 915 18 270 (17,262)
Others 1.83 (13,124) (4,934) 1,605 (4,940) 2,482 - - (18,911)
(1,569,797) (112,929) 97,217 (1,633,023) 7,292 1,030 17,081 (3,193,129)
2,747,792 531,545 (305,535) 5,981,727 (53,896) (1,780) (25,667) 8,874,186

Page: 10 3

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP and IFRS
Consolidated
Rate Transfer to Exchange
p.a.% 12.31.09 Acquisitions Write-offs Transfers held for sale rate variation 06.30.10
Cost
Land 674,496 - (1,605) 8,241 (5,204) (71) 675,857
Buildings and improvements 4,381,906 2,898 (14,829) 119,610 (8,192) (1,322) 4,480,071
Machinery and equipment 5,068,605 9,973 (47,252) 163,557 (9,066) (5,272) 5,180,545
Facilities 1,234,478 1,253 (4,709) 48,497 (1,002) (37) 1,278,480
Furniture 78,550 612 (2,060) 2,012 (315) (757) 78,042
Vehicles and aircrafts 32,929 175 (5,098) 928 (12) 1,085 30,007
Others 146,885 4,074 (1,306) 8,736 - 25 158,414
Construction in progress 424,784 211,675 (8,425) (356,650) - (717) 270,667
Advances to suppliers 24,682 5,465 (4,249) (107) - - 25,791
12,067,315 236,125 (89,533) (5,176) (23,791) (7,066) 12,177,874
Depreciation
Buildings and improvements 3.19 (953,646) (62,853) 3,988 (1,494) 5,029 1,259 (1,007,717)
Machinery and equipment 7.27 (1,849,237) (84,764) 42,367 6,257 6,110 3,855 (1,875,412)
Facilities 4.98 (315,407) (16,627) 2,017 289 743 28 (328,957)
Furniture 7.83 (38,666) (2,699) 1,537 8 263 599 (38,958)
Vehicles and aircrafts 18.29 (17,262) (3,944) 2,358 2,305 12 241 (16,290)
Others 1.77 (18,911) (3,457) 1,065 (6,852) - - (28,155)
(3,193,129) (174,344) 53,332 513 12,157 5,982 (3,295,489)
8,874,186 61,781 (36,201) (4,663) (11,634) (1,084) 8,882,385

The fixed assets additions and construction in progress are mainly represented by: (i) expansion of the Três de Maio powder milk plant (R$60,645); (ii) construction of a cold storage in Teutônia dairy plant (R$2,931); (iii) expansion of capacity of poultry slaughtering in Serafina Correa and Carambei plants (R$11,961); (iv) expenses related to construction of the agroindustrial complex in Bom Conselho (R$7,647); (v) improvements in the distribution center of Rio Verde (R$3,576); and (vi) in the wholly-subsidiary Sadia, the construction in progress totalized (R$147,777) and is represented by expansion projects and optimization of industrial plants, mainly in Lucas do Rio Verde and Vitória do Santo Antão plants (R$105,542).

The disposals refer primarily to: (i) (R$13,152) disposal of Romania plant; (ii) disposal of Ivoti unit (R$2,551); and (iii) disposal of the distribution center in Vitoria, (R$1,000).

During the six month period ended on June 30, 2010, the Company capitalized interests in the approximately amount of R$9,647 (R$8,128 in June 30, 2009). The interest rate utilized to determine the amount to be capitalized was 5.73%.

At December 31, 2009, as required by the CVM Deliberation No. 565/08, the Company reviewed and adjusted the criteria used to determine the estimated economic useful lives of property, plant and equipment and related depreciation, depletion and amortization rates. The Company recorded the change in estimate as of December 31, 2009 based on the registered fixed assets as of January 1, 2009.

Page: 10 4

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

The financial statement of the first semester of 2009 does not includes this adjust, if the change were retroactive, the depreciation expense should be decreased in approximately in R$48,880.

18. INTANGIBLE ASSETS

Intangible assets are comprised of the following items:

BR GAAP
Parent company
Rate Accumulated
p.a.% Cost amortization 06.30.10 12.31.09 01.01.09
Software 20.00 35,258 (9,347) 25,911 11,445 10,663
Patents - 3,098 - 3,098 - -
Goodwill - 1,520,488 - 1,520,488 1,520,488 1,453,713
1,558,844 (9,347) 1,549,497 1,531,933 1,464,376
BR GAAP and IFRS
Consolidated
Rate Accumulated
p.a.% Cost amortization 06.30.10 12.31.09 01.01.09
Software 20.00 176,573 (102,484) 74,089 76,846 11,820
Relationship with suppliers 42.00 135,000 (56,104) 78,896 106,948 -
Patents 10.00 5,669 (200) 5,469 1,900 -
Trademarks - 1,256,000 - 1,256,000 1,256,000 -
Goodwill - 2,832,821 - 2,832,821 2,834,769 1,545,732
4,406,063 (158,788) 4,247,275 4,276,463 1,557,552

The intangible assets rollforward is presented below:

BR GAAP
Parent company
01.01.09 Amortization Transfers Merger (1) 12.31.09
Software 10,663 (292) 1,074 - 11,445
Goodwill: 1,453,713 - - 66,775 1,520,488
Eleva Alimentos 1,273,324 - - - 1,273,324
Batávia 133,163 - - - 133,163
Ava - - - 49,368 49,368
Cotochés 39,590 - - - 39,590
Paraíso Agroindustrial - - - 16,751 16,751
Perdigão Mato Grosso 7,636 - - - 7,636
Incubatório Paraíso - - - 656 656
1,464,376 (292) 1,074 66,775 1,531,933
(1) Merger of Perdigão Agroindustrial on March 9, 2009.

Page: 10 5

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP
Parent company
12.31.09 Additions Amortization Transfers Merger (1) 06.30.10
Software 11,445 13,704 (2,013) 1,569 1,206 25,911
Patents - 440 - 2,658 - 3,098
Goodwill: 1,520,488 - - - - 1,520,488
Eleva Alimentos 1,273,324 - - - - 1,273,324
Batávia 133,163 - - - - 133,163
Ava 49,368 - - - - 49,368
Cotochés 39,590 - - - - 39,590
Paraíso Agroindustrial 16,751 - - - - 16,751
Perdigão Mato Grosso 7,636 - - - - 7,636
Incubatório Paraíso 656 - - - - 656
1,531,933 14,144 (2,013) 4,227 1,206 1,549,497
(1) Merger of Avipal Nordeste S.A. on March 31, 2010.
BR GAAP and IFRS
Consolidated
Exchange
Business rate
01.01.09 Additions combination Amortization Transfers Write-offs variation 12.31.09
Software 11,820 6,370 57,850 (328) 1,266 (132) - 76,846
Relationship with suppliers - - 135,000 (28,052) - - - 106,948
Patents - - 2,000 (100) - - - 1,900
Trademarks - - 1,256,000 - - - - 1,256,000
Goodwill: 1,545,732 - 1,293,818 - - - (4,781) 2,834,769
Sadia - - 1,293,818 - - - - 1,293,818
Eleva Alimentos 1,273,324 - - - - - - 1,273,324
Batávia 133,163 - - - - - - 133,163
Ava 49,368 - - - - - - 49,368
Cotochés 39,590 - - - - - - 39,590
Paraíso Agroindustrial 16,751 - - - - - - 16,751
Plusfood 21,194 - - - - - (4,781) 16,413
Perdigão Mato Grosso 7,636 - - - - - - 7,636
Sino dos Alpes 4,050 - - - - - - 4,050
Incubatório Paraíso 656 - - - - - - 656
1,557,552 6,370 2,744,668 (28,480) 1,266 (132) (4,781) 4,276,463

Page: 10 6

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP and IFRS
Consolidated
Exchange
12.31.09 Additions Amortization Transfers rate variation 06.30.10
Software 76,846 15,338 (19,886) 1,569 (37) 73,830
Relationship with suppliers 106,948 - (28,052) - 259 79,155
Patents 1,900 440 (100) 3,240 (11) 5,469
Trademarks 1,256,000 - - - - 1,256,000
Goodwill: 2,834,769 - - - (1,948) 2,832,821
Sadia 1,293,818 - - - - 1,293,818
Eleva Alimentos 1,273,324 - - - - 1,273,324
Batávia 133,163 - - - - 133,163
Ava 49,368 - - - - 49,368
Cotochés 39,590 - - - - 39,590
Paraíso Agroindustrial 16,751 - - - - 16,751
Plusfood 16,413 - - - (1,948) 14,465
Perdigão Mato Grosso 7,636 - - - - 7,636
Sino dos Alpes 4,050 - - - - 4,050
Incubatório Paraíso 656 - - - 656
4,276,463 15,778 (48,038) 4,809 (1,737) 4,247,275

Amortizations of loyalty of integrated businesses and relationship with suppliers are recognized in net income in the cost of sales, while software amortization is recorded according to its use, where the alternatives are cost of sales, administrative or business expenses.

Trademarks in intangible assets derive from the business combination with Sadia and are considered assets with indefinite useful life as they are expected to contribute toward the Company’s cash flows indefinitely.

The goodwill presented above is supported by appraisal report, after allocation in the assets in use identified.

The value of goodwill and the value of intangible assets with indefinite useful life (trademarks and patents) allocated by cash-generating unit, are presented in note 5.

Based on the Management’s analysis prepared in the last quarter of 2009, no adjustments were identified to reduce the assets balance to the recoverable value.

During the first quarter of 2010 Management has not identified any events related to impairment factors.

Page: 10 7

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

19. TRADE ACCOUNTS PAYABLE

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Domestic suppliers
Third parties 911,042 902,102 297,364 1,664,964 1,714,547 932,151
Related parties 9,034 17,464 43,006 3,516 1,706 175
Foreign suppliers
Third parties 28,640 55,655 165 144,599 189,115 151,059
Related parties 1,350 1,209 - - - -
950,066 976,430 340,535 1,813,079 1,905,368 1,083,385

Accounts payable to suppliers are not subject to the incidence of interest and are generally settled in average within 31 days.

The information on accounts payable involving related parties is presented in note 28.

20. CURRENT AND NON-CURRENT LOANS AND FINANCING

BR GAAP
Parent company
Average interest rate Balance Balance Balance
Charges (% p.a.) (% p.a.) WAMT (*) Short term Long term 06.30.10 12.31.09 01.01.09
Local currency
Working capital 6.73% (TR+7.39% on 12.31.09) 6.73% (7.42% on 12.31.09) 0.4 419,435 1,602 421,037 473,265 78,542
BNDES, FINEM, credit facilities of
development banks and other secured TJLP + 2.84% (TJLP + 2.78% on
debts 12.31.09) 8.77% (8.64% on 12.31.09) 2.0 159,076 431,839 590,915 635,912 167,865
TJLP/CDI + 4.42% (TR/TJLP/CDI +
Export credit facility 3.6% on 12.31.09) 10.42% (10.14% on 12.31.09) 1.8 5,441 382,170 387,611 566,488 -
Tax incentives IGPM + 1% (IGPM + 1% on 12.31.09) 1.09% (0.97% on 12.31.09) 9.0 13 6,544 6,557 2,088 277,351
583,965 822,155 1,406,120 1,677,753 523,758
Foreign currency
Advances on exchange contracts (5.29% on 12.31.09) + e.r. (US$) (5.29 % on 12.31.09) e.r. (US$) - - - - 53,432 202,594
LIBOR/CDI + 1.89% (LIBOR/CDI +
2.46% on 12.31.09) + e.r. (US$ and 2.64% (2.84% on 12.31.09) + e.r.
Export credit facility others currencies) (US$ and others currencies) 1.8 122,504 806,700 929,204 1,185,249 853,220
BNDES, FINEM, credit facilities of UMBNDES + 2.48% (UMBNDES +
development banks and other secured 2.47% on 12.31.09) + e.r. (US$ and 6.77% (6.72% on 12.31.09) + e.r.
debts others currencies) (US$ and others currencies) 1.8 19,542 46,631 66,173 70,735 23,088
142,046 853,331 995,377 1,309,416 1,078,902
726,011 1,675,486 2,401,497 2,987,169 1,602,660
(*) Weighted average maturity date in years.

Page: 10 8

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP and IFRS
Consolidated
Average interest rate Balance Balance Balance
Charges (% p.a.) (% p.a.) WAMT (*) Short term Long term 06.30.10 12.31.09 01.01.09
Local currency
Working capital 6.74% (TR + 7.71% on 12.31.09) 6.78% 0.3 841,353 1,602 842,955 973,033 220,272
BNDES, FINEM, credit facilities of
development banks and other secured TJLP + 6.44% (TJLP + 2.79% on
debts 12.31.09) 9.03% 8.2 444,099 1,509,638 1,953,737 2,101,411 538,252
TJLP/CDI + 4.42% (TR/TJLP/CDI +
Export credit facility 3.6% on 12.31.09) 10.42% (10.14% on 12.31.09) 1.8 5,441 382,170 387,611 1,137,409 -
IGPM + 3.39% (IGPM + 1% on
Tax incentives 12.31.09) 2.15% (0.97% on 12.31.09) 7.9 13 8,920 8,933 4,443 463,284
FIDIC - - - 292,620 - 292,620 353,364 -
1,583,526 1,902,330 3,485,856 4,569,660 1,221,808
Foreign currency
Advances on exchange contracts 5.29% + e.r. (USD on 12.31.09) 5.29% + e.r.(USD on 12.31.09) - - - - 53,432 443,674
Bonds 7.26% 7.26% 9.3 43,350 1,763,010 1,806,360 419,137 -
Working capital EURIBOR + 1.20 % 0.41 % + e.r. (US$) - - - - - 49,605
LIBOR/CDI + 1.78% (LIBOR/CDI + 2.51% (2.77% on 12.31.09) + e.r.
Export credit facility 2.35% on 12.31.09) (US$ and others currencies) 1.8 484,936 1,983,158 2,468,094 3,719,384 3,493,988
BNDES, FINEM, credit facilities of UMBNDES + 5.26% (UMBNDES +
development banks and other secured 2.48% on 12.31.09) + e.r. (US$ and 6.77% (6.73% on 12.31.09) + e.r.
debts others currencies) (US$ and others currencies) 3.9 66,271 170,495 236,766 292,408 85,337
594,557 3,916,663 4,511,220 4,484,361 4,072,604
2,178,083 5,818,993 7,997,076 9,054,021 5,294,412
(*) Weighted average maturity date in years.

20.1. Working capital

Rural credit : The Company and its subsidiaries have rural credit facilities with several commercial banks that, according to a Federal Government program, offer loans as an incentive to rural activities. The funds originating from this financing facility are used as working capital.

PROCER – Credit facilities of BNDES : Through PROCER, BNDES grants operating credit facilities to help Brazilian agribusiness companies and agricultural companies.

Industrial credit notes : We issue Industrial Credit Notes, receiving credits from official funds (“Fundo de Amparo ao Trabalhador”) and from the Fundo Constitucional de Financiamento do Centro-Oeste. The notes have maturity periods of up to five years, maturing between 2010 and 2014. These notes are guaranteed by a pledge of machinery and equipment and real estate mortgages.

20.2. BNDES, FINEM, loan facilities of development banks and another secured debts

The Company and its subsidiaries have various outstanding obligations with the BNDES. The loans were executed for the acquisition of machinery, equipment and expansion of productive facilities. The principal and the interest of the FINEM loans are paid in monthly installments, maturing between 2010 and 2015, and are

Page: 10 9

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

guaranteed by a pledge of equipment and facilities and mortgage on the property owned by the Company. The amounts of these loans are indexed by the UMBNDES basket of currencies, which is composed of the currencies in which BNDES obtains its resources. The impact of interest reflects the daily fluctuation of the currencies that form the basket.

PESA : Sadia has a loan facility obtained through the Special Program for Asset Recovery subject to the variations of the IGPM plus interest of 9.89% p.a., guaranteed by endorsements and liens of government debt securities (note 8).

20.3. Fiscal incentives

State Programs for Financing with Fiscal Incentive : Under the terms of these programs, we were granted credit proportional to the payment of ICMS generated by investments in the construction or expansion of industrial facilities in these states. The credit facilities have a term of 20 years and fixed or variable interest rates based on the IGPM plus a margin.

20.4. Export credit facilities

Pre-payment of exports : Generally denominated in US dollars, maturing between 2010 and 2013. The export prepayment credit facilities are pegged to the LIBOR (“London Interbank Offered Rate”) of three and six months plus spread. Under the terms of each one of these credit facilities, the Company receives loans guaranteed by accounts receivable relating to exports of our products to specific customers. The credit facilities are generally guaranteed by BRF - Brasil Foods S.A. The main obligations of these contracts include limitations of guarantees, takeovers, and in a number of cases, financial obligations.

Commercial credit facilities : Indebtedness under the terms of these credit facilities is denominated in US dollars and maturities range from one to four years. Business loan facilities yield interest at the LIBOR rate plus a margin with quarterly, semi-annual and annual payments. Under the terms of each one of these credit facilities, the Company receives loans used in raw material imports and in other working capital requirements. The credit facilities are generally guaranteed by BRF - Brasil Foods S.A. The main obligations under the terms of these contracts include limitations on takeovers and sales of assets.

Credit facilities of BNDES - Exim : The Company has some credit facilities provided by BNDES for export financing with several commercial banks acting as intermediaries. These resources are pegged to the TJLP with maturity in 2012.

Page: 1 1 0

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Settlement occurs in the local currency without the risk associated with foreign exchange rate variation.

Advances on exchange contracts : Advances on exchange contracts (“ACCs”) are obligations with commercial banks, where the principal is settled through exports of products, as shipped. Interest is paid in the settlement of the foreign exchange and the contracts are guaranteed by the actual exported goods. When the export documents are delivered to the financing banks, these obligations start to be called advances against draft presentations (“ACEs”) and are written off only upon the final payment by the overseas customer. The regulation of the Brazilian Central Bank allows companies to obtain short-term financing under the terms of the ACCs with maturity in up to 360 days from the date of scheduled shipment of the exports, or short-term financing under the terms of the ACEs with maturity in up to 180 days from the date of the effective shipment of the exports, in each case at banks in Brazil, although they refer to loans denominated in US dollars. On June 30, 2010, the Company did not have any open ACC or ACE contract.

20.5. Bonds

BFF notes : On January 28, 2010, BFF International Limited issued senior notes in the total value of US$750,000. The notes are guaranteed by BRF and by Sadia, with a nominal interest rate of 7.25% p.a. and effective rate of 7.31% p.a., maturing on January 28, 2020.

Sadia Bonds : In the total value of US$250,000. The bonds are guaranteed by BRF and by Sadia, with an interest rate of 6.88% p.a. and maturing on May 24, 2017.

20.6. Debentures

BRF issued 81,950 simple debentures, fully subscribed between June 30, 1998 and November, 21, 2000, to BNDES, with a unit nominal value of one real (R$ 1) and redemption period between June 15, 2001 and June 15, 2010. As of June 30, 2010 all the debentures were redeemed.

20.7. Long term debt maturity

The schedule of maturities of long term debts is presented below:

Page: 1 11

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 06.30.10
2011 354,643 643,008
2012 914,414 2,121,421
2013 318,508 690,131
2014 46,214 194,750
2015 to 2044 41,707 2,169,683
1,675,486 5,818,993

The wholly-owned subsidiary Sadia assigned receivables to a Credit Assignment Investment Fund (“FIDC”), administered by Concórdia S.A. Corretora de Valores Mobiliários, Câmbio e Commodities.

For the sale of domestic receivables, during the six month period ended June 30, 2010, the wholly-owned subsidiary Sadia received R$2,600,137 and incurred financial expense in the amount of R$16,000.

20.8. Guarantees

BR GAAP — Parent company BR GAAP and IFRS — Consolidated
06.30.10 12.31.09 06.30.10 12.31.09
Balance of financing 2,401,497 2,987,169 7,997,076 9,054,021
Mortgage guarantees: 636,072 675,979 1,867,644 2,042,837
Linked to FINEM-BNDES 585,464 659,141 1,651,551 1,852,174
Linked to FNE-BNB - - 165,485 165,529
Linked to tax incentives and other 50,608 16,838 50,608 25,134
Guarantees by means of fiduciary assignment of assets 11,315 17,769 11,880 20,183
Linked to FINEM-BNDES 11,247 17,676 11,247 19,217
Linked to FINAME-BNDES - - 565 858
Linked to tax incentives and other 68 93 68 108

The subsidiary Sadia is the guarantor of a loan obtained by Instituto Sadia de Sustentabilidade at the National Bank for Economic and Social Development (“BNDES”). This loan is aimed at the implementation of biodigesters on the properties of the rural producers taking part in the Sadia integration system, targeting the mechanism of clean development and reduction of greenhouse gas emission. The value of these sureties on June 30, 2010 totaled R$81,295 (R$82,976 on December 31, 2009).

Sadia is guarantor of loans related to a special program, which aimed the development of outgrowers in the central region of Brazil. The proceeds of such loans shall be utilized to improve farm conditions and will be paid in 10 years. The actual collateral is the land and equipment acquired by the outgrowers. The total of guarantee as of June 30, 2010 amounted R$546.545 (R$546,888 as of December

Page: 1 12

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

31, 2009).

The Company contracted guarantees in the amount of R$380,629 offered mainly in litigation which were discussed the use of tax credits. These guarantees have an average cost of 1.23% p.a.

20.9. C ommitment s

In the normal course of business, the Company enters into regular agreements with third parties for the purchase of raw materials, mainly corn, soymeal and pork, where the agreed prices can be fixed or to be fixed. On June 30, 2010, these firm purchase commitments totaled R$744,049 at the parent company and R$2,197,359 in the consolidated quarterly information (R$495,095 at the parent company and R$1,809,320 in the consolidated quarterly information on December 31, 2009), considering the market value of the commodities on the date of these quarterly information.

20.10. Covenants

The Company has foreign currency export prepayment financing agreement with habitual default clauses for these types of operation and that, if not complied with, may cause their due dates to be brought forward. On June 30, 2010, all these conditions were met by the Company.

Indicator
Restrictive clauses (indicators to be achieved) achieved
Net debt / shareholders' equity lower than 1.5 0.3
Net debt / EBITDA lower than 3.5 2.5
Minimum current liquidity of 1.1 1.9
Total liabilities less shareholders' equity / shareholders' equity equal to or less than 2.2 0.9

Page: 1 13

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

21. OTHER FINANCIAL ASSETS AND LIABILITIES

BR GAAP BR GAAP and IFRS
Parent company Consolidated
06.30.10 12.31.09 01.01.09 06.30.10 12.31.09 01.01.09
Derivative financial instruments
Cash flow hedge:
Assets:
Currency forward contracts (NDF) 36,188 21,983 - 36,188 21,983 -
Currency option contracts 221 - - 221 - -
Swap / currency contracts 843 2,744 10,405 843 2,744 68,516
37,252 24,727 10,405 37,252 24,727 68,516
Liabilities:
Currency forward contracts (NDF) (1,136) (1,064) - (1,136) (1,064) -
Swap / currency contracts (92,323) (85,905) (7,410) (92,323) (85,905) (90,851)
(93,459) (86,969) (7,410) (93,459) (86,969) (90,851)
Derivatives not designated as hedge:
Assets:
Currency forward contracts (NDF) - - - 1,004 2,839 10,695
Future contracts for dollars - 20 - - 20 -
- 20 - 1,004 2,859 10,695
Liabilities:
Currency forward contracts (NDF) - - - (222) (119) (45,754)
Swap contracts (1,042) - - (1,042) - -
Future contracts for dollars (972) - - (972) - (10,107)
Future contracts for live cattle (5) - - (5) - -
(2,019) - - (2,241) (119) (55,861)
Current assets 37,252 24,747 10,405 38,256 27,586 79,211
Current liabilities (95,478) (86,969) (7,410) (95,700) (87,088) (146,712)

The collateral given in the transactions presented above are disclosed in note 8.

22. LEASING

The Company is lessee in many contracts, which can be classified as operating or financial lease.

22.1. O perating lease

The minimum future payments of operating lease agreements not cancelable, in total and for each of the following years, is presented below:

Page: 1 14

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP and IFRS
Consolidated
06.30.10
2010 119,537
2011 184,921
2012 127,844
2013 24,546
2014 onwards 26,182
483,030

The payments of lease agreements recognized as expense amount to R$90,441 on June 30, 2010 (R$33,772 on June 30, 2009)

22.2. Capital lease

The Company maintained control of the assets leased, recorded as fixed assets, which balances amounted to:

BR GAAP and IFRS
Consolidated
06.30.10 12.31.09 01.01.09
Cost 14,771 14,810 17,419
Accumulated depreciation (*) (7,080) (4,972) (8,523)
Residual 7,691 9,838 8,896

(*) The leased assets are depreciated using the rate defined in the explanatory note 17 for machinery and equipment or according to the duration of the contract, whichever is lower, as determined by CVM Deliberation No. 554/08.

The minimum mandatory future payments below are separated by categories and were entered in the balance sheet as other obligations:

BR GAAP and IFRS
Consolidated
Present value of Minimum future
minimum payments Interest payments
06.30.10 06.30.10 06.30.10
2010 2,398 182 2,580
2011 3,860 306 4,166
2012 1,954 162 2,116
2013 468 52 520
2014 onwards 77 13 90
8,757 715 9,472

Page: 1 15

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Some agreements have clauses that allow the Company to extend the agreed term, as well as, purchase option in the end the agreement term there is no clause of contingent payment.

23. SHARE BASED PAYMENTS

On March 30, 2010, the participants of a general meeting of shareholders approved the stock option plan for officers of the Company and of its subsidiaries, consisting of two instruments: (i) stock option plan, granted annually to the beneficiary and (ii) additional stock option plan, optional for the beneficiary, who may adhere with part of their profit-sharing money. The basis of the vesting conditions will be the attainment of effective results and valuation of the Company’s business.

The plan includes shares issued by the Company up to the limit of 2% of the total stock, and its purpose is to: (i) attract, retain and motivate the beneficiaries, (ii) create value for shareholders, and (iii) encourage the view of entrepreneur of the business.

The plan is managed by the Board of Directors, within the limits established in the general guidelines of the plan and in the applicable legislation, which are disclosed in detail in the Company’s “Reference Form”.

The strike price of the options is determined by the Board of Directors and is equivalent to the average amount of the closing price of the share at the last twenty trading sessions of the Sao Paulo Stock Exchange, prior to the grant date, restated monthly by the variation of the Amplified Consumer Price Index (“IPCA”) between the grant date and the month prior to the remittance of the option exercise notice by the beneficiary.

The vesting period during which the participant cannot exercise the purchase of the shares is 3 years and will observe the following deadlines from the grant date of the option:

  • up to 1/3 of the total options may be exercised after one year;

  • up to 2/3 of the total options may be exercised after two years; and

  • all the options may be exercised after three years.

After the vesting period and within no more than 5 years from the grant date, the beneficiary will lose the right to the unexercised options.

Page: 1 16

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

To satisfy the exercise of the options, the Company may issue new shares or use shares held in treasury.

The composition of the options granted in the period is as follows:

Date Strike price Quotation
Number of Fair value
Beginning End of shares option Upon Updated by Share on
Grant date of the year the year granted granted granting IPCA 06.30.10
05.03.10 05.02.11 05.02.15 1,540,011 7.77 23.44 23.53 23.70

The maximum and minimum exercise price is R$23.53 (twenty three Reais and fifty three cents) and weighted average remaining contractual term is 58.9 months.

The Company recognized on June 30, 2010, in its shareholders’ equity the fair value of options in the amount of R$1,185 with a corresponding expense in the statement of income.

The fair value of stock options was indirectly measured based on the pricing model Black-Scholes, based on the following premises:

06.30.10
Option expected term:
Exercise in the 1st year 3.0 years
Exercise in the 2nd year 3.5 years
Exercise in the 3rd year 4.0 years
Risk-free interest rate 6.6%
Volatility 41.0%
Dividends expected on shares 1.1%

23.1. Expected period

The lifetime of the option expected by the Company, representing the period in which it is believed that the options will be exercised and was determined under the assumption that the beneficiaries will exercise their options at the limit of the maturity period.

23.2. Risk-free interest rate

The Company uses as a risk-free interest rate the NTN-B (“National Treasury Bond”) available on the date of calculation and with maturity equivalent to the life of the option.

Page: 1 17

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

23.3. Volatility

The estimated volatility took into account the weighting of the trading history of the Company and of similar companies in the market, considering the unification of Perdigão and Sadia under code BRFS3.

23.4. Expected dividends

The percentage of dividends used was obtained with a basis on the average payment of dividends per share in relation to the market value of the shares, for the past four years.

23.5. Expected inflation rate

The expected inflation rate is determined based on estimated INPC by Central Bank of Brazil, accumulated between the closing date of financial statements and the exercise date of the vested options.

On March 30, 2010, the shareholders of BRF - Brasil Foods S.A. approved, under the terms of the Association Agreement and of the stock option plan of Sadia, the migration of the options granted and not yet exercised by executives, before the association, to a new plan assumed by the Company, and that will maintain all the characteristics and conditions of the previous plan.

The composition of the options granted and not exercised as of June 30, 2010, is as follows:

Quantity converted share Price of converted share
Date based on BRF shares based on BRF shares
Beginning End Options Outstanding Upon Updated by
Cycles Grant date of the year of the year granted options granting INPC
2006 09.26.06 09.26.09 09.26.11 936,306 262,007 21.35 26.13
2007 09.27.07 09.27.10 09.27.12 1,329,980 658,340 37.70 43.95

As of June 30, 2010 the fair value of Company’ share was R$23.70 (twenty three Reais and seventy cents).

The pricing model adopted and the assumptions related to definition of expected term, volatility of the share, expected dividends and inflation are the same adopted by the parent company.

On June 30, 2010 the subsidiary Sadia recognized the fair value of the options in the amount of R$976 (R$3,807 on December 31, 2009) in the account of other

Page: 1 18

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

noncurrent liabilities.

The offsetting cost was recognized in net income for the period, under the heading of administrative expenses, totaling reversal of expense of R$2,831 in the period of six month ended June 30, 2010.

During the second quarter of 2010, Sadia’s executives exercised the vested right related to the stock options previously granted of 79,800 shares in the total amount of R$1,713, counterparts in treasury shares of R$76 and R$1,637 in capital reserve.

24. SUPPLEMENTARY PLAN OF RETIREMENT AND OTHER BENEFITS TO EMPLOYEES

The Company offers supplementary retirement plans and other benefits to their employees.

The assets and actuarial liabilities and the movement of the obligations and rights related are presented below:

BR GAAP and IFRS
Consolidated
Liabilities Income
Notes 06.30.10 12.31.09 01.01.09 06.30.10 06.30.09
Supplementary Retirement Plan- PSPP 24.1.1 - - - (131) (16)
Supplementary Retirement Plan - FAF 24.1.2 - - - (29,938) -
Plan medical 24.2.1 62,071 56,865 17,387 (1,548) (1,330)
Penalty F.G.T.S. 24.2.2 139,590 129,368 56,015 (10,222) (5,054)
Reward for working time 24.2.3 44,160 40,944 10,823 (3,216) (988)
Indemnity for termination 24.2.4 7,292 7,326 - 34 -
Indemnity for retirement 24.2.5 13,853 15,225 - 1,372 -
266,966 249,728 84,225 (43,649) (7,388)

24.1. Supplementary retirement plan

24.1.1. PSPP

Perdigão Sociedade de Previdência Privada (“PSPP”) was created in April 1997, sponsored by the Company and its subsidiaries (except for Sadia).

The purpose of PSPP is the management of supplementary plans of benefits of retirement for the employees of the sponsors. PSPP manages two retirement plans. Plan I, which is closed to new adhesions, and Plan II, which has been in operation since April 1, 2009.

Page: 1 19

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

In both plans, the contributions are made on a 1 to 1 basis (the contributions of the sponsor are equal to the basic contributions of the participants), and the actuarial calculations are made by independent actuaries, on a yearly basis, according to the rules in force.

Should the participant end the employment relationship with the sponsor, the balance formed by the contributions of the sponsor not used for the payment of benefits, will form a fund of overage of contributions that may be used to compensate the future contributions of the sponsor. The asset presented in the balance of the fund of reversion amounts to R$3,468 (R$251 on December 31, 2009) and was recorded by the Company in the ‘other rights’ item.

Although the plans offered by PSPP are basically of defined contribution, there is a small portion of defined benefits.

24.1.2. FAF

The subsidiary Sadia sponsors a plan of social-security benefits, in the modality of defined benefit, intended for its employees and administered by “Attilio Francisco Xavier Fontana Foundation”.

The benefit of supplementary retirement is defined as the difference between (i) the benefit salary (updated average of the last 12 updated salaries of participation, capped at 80% of the last participation salary) and (ii) the value of the retirement paid by the official social-security regime. The benefit of supplementation is adjusted on a yearly basis at the National Consumer Price Index (“INPC”).

The actuarial regime adopted is that of capitalization for supplementation of retirements and pensions and simple sharing for the supplementations of sick pay. The contribution of Sadia is made through a percentage that applies to the payroll of the active participants, according to the cost plan prepared on yearly basis by independent actuaries and approved by the Deliberative Council of “Attilio Francisco Xavier Fontana Foundation”.

According to the bylaws of the Foundation, the sponsoring company is jointly and severally liable for the obligations contracted by the entity with its participants and dependents.

As from January 1, 2003, the subsidiary Sadia started to offer a benefit plan in the modality of defined contribution managed by an open-ended entity of supplementary social security, for all the employees admitted by Sadia and its subsidiaries. The funding of the plan is proportional in relation to the basic monthly contribution

Page: 1 20

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

(mandatory), whose portion of the subsidiary is equal to that made by the employee according to a scale of contribution based on salary ranges, which vary from 1.5% to 6% of the respective remuneration, in accordance with the ceiling of contribution that is updated every year. The contributions made by Sadia in the six month period ended on June 30, 2010 amounted to R$1,256, on that date the plan had 1,516 participants (1,566 participants on December 31, 2009).

24.2. Other benefits

24.2.1. Medical plan

The Company registered the obligations resulting from Law No. 9.656 and Deliberation of the Council of Supplementary Health No. 21/99, which guarantees to the retired employee that contributed to the health plan by reason of employment relationship, for at least 10 years, the right of maintenance as beneficiary, on the same conditions of coverage enjoyed when the employment contract was in force, provided that they assume full payment.

24.2.2. FGTS fine at the time of retirement of the employee

As settled by the Regional Labor Court (“TRT”) on April 20, 2007, retirement does not affect the employment contract between the Company and its employees, and so by means of actuarial calculation and based on the practices of discharge that the Company acknowledged the related liability.

24.2.3. Award for length of service

The Company usually rewards employees that attain at least 10 years of services rendered, the actuarial liability resulting from that practice was recorded in the balance sheet.

24.2.4. Severance pay

The executive offices discharged on the initiative of the company, in addition to full pay, are eligible to receive a compensation equivalent to 0.5 salary in force at the time of discharge, for each year or fraction of year worked for Sadia. The grant of this benefit is subject to an assessment of the career, performance and length of service of the beneficiary, actuarial liability resulting from that practice was recorded in the balance sheet.

Page: 1 21

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

24.2.5. Retirement compensation

By Deliberation of the Company, the employee that works for at least 10 years will receive a bonus, the actuarial liability resulting from this practice was recorded in the balance sheet.

The expenses incurred with all the benefits presented above were acknowledged in the statement of income in the item ‘other operating revenues (expenses)’ and include: interest paid, actuarial gain (loss), cost of the service and revenue expected from the asset of the plan.

The actuarial gains and losses acknowledged in other comprehensive results are presented below:

BR GAAP — Pare nt company BR GAAP and IFRS — C onsolidated
06.30.10 06.30.09 06.30.10 06.30.09
At the beginning of the year 8,596 - 8,596 -
Rollforward (9,878) - (9,878) -
At the end of the year (1,282) - (1,282) -

25. PROVISION FOR TAX, CIVIL AND LABOR

The Company and its subsidiaries are involved in certain legal proceedings arising from the regular course of business, which include civil, administrative, tax, social insurance and labor lawsuits.

The Company classifies the risk of adverse decisions in the legal suits as “remote”, “possible” or “probable”. The provisions recorded by the Company in its consolidated financial statements relating to such proceedings fairly reflect the probable losses as determined by the Company’s management, based on legal advice and for which the amount of probable losses is known or can be reasonably estimated.

The Company is involved in certain judicial proceedings for which the amount of probable losses is not known or cannot reasonably be estimated, especially in the civil area. The Company, with the assistance of its legal counsel, monitors the course of these claims and classifies the probability of losses in such cases as possible or remote.

The Company’s management believes that the recorded provision for contingencies, according to CVM Deliberation No. 594/09 is sufficient to cover eventual losses related to its legal proceedings, as presented below:

Page: 1 2 2

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

25.1. Contingencies for probable losses

The rollforward of the provision for tax, labor and legal contingencies is summarized below:

BR GAAP
Parent company
Merger of Price index
01.01.09 company (*) Additions Reversals Payments update 12.31.09
Tax 89,306 64,127 31,337 (77,343) (5,762) 10,617 112,282
Labor 21,959 22,434 23,868 (11,653) (22,161) 4,131 38,578
Civil, commercial and other 7,613 5,882 18,035 (16,817) (1,502) (100) 13,111
118,878 92,443 73,240 (105,813) (29,425) 14,648 163,971
Current 29,425 58,281
Non-current 89,453 105,690
BR GAAP
Parent company
Merger of Price index
12.31.09 company (*) Additions Reversions Payments update 06.30.10
Tax 112,282 - 23,353 (7,082) (6,599) 4,000 125,954
Labor 38,578 401 18,934 (1,743) (22,395) 2,067 35,842
Civil, commercial and other 13,111 123 12,212 (430) (1,635) 1,483 24,864
163,971 524 54,499 (9,255) (30,629) 7,550 186,660
Current 58,281 58,281
Non-current 105,690 128,379

(*) The increase in 2009 is related to the merger of Perdigão Agroindustrial on March 9, 2009 while the increase in 2010 is related to the merger of Avipal Nordeste on March 31, 2010.

BR GAAP and IFRS
Consolidated
Business Price
01.01.09 combination Additions Reversions Payments index 12.31.09
Tax 153,219 102,708 33,992 (89,135) (7,833) 11,867 204,818
Labor 51,623 46,306 44,572 (20,113) (28,284) 4,563 98,667
Civil, commercial and other 14,300 80,159 23,565 (20,404) (2,810) 3,055 97,865
Contingent liabilities - 630,258 - - - - 630,258
219,142 859,431 102,129 (129,652) (38,927) 19,485 1,031,608
Current 38,927 91,349
Non-current 180,215 940,259

Page: 1 2 3

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

BR GAAP and IFRS
Consolidated
Price index
12.31.09 Additions Reversions Payments update 06.30.10
Tax 204,818 25,196 (7,675) (6,599) 6,852 222,592
Labor 98,667 28,620 (3,232) (22,560) 2,079 103,574
Civil, commercial and other 97,865 14,541 (23,926) (1,634) 8,146 94,992
Contingent liabilities 630,258 - - - - 630,258
1,031,608 68,357 (34,833) (30,793) 17,077 1,051,416
Current 91,349 91,349
Non-current 940,259 960,067

25.1.1. Tax

The tax contingencies classified as probable losses involve the following main legal proceedings:

Income tax and social contribution : t he subsidiary Sadia registered a R$22,371 provision (R$21,742 as of December 31,2009) related to (i) R$14,719 (R$14,242 as of December 31,2009) relating to a tax assessment notice challenging the correctness of Granja Rezende’s taxable income (merged in 2002); (ii) R$6,227 (R$6,092 as of December 31, 2009) relating to a tax assessment notice alleging undue offsetting of income tax withheld on Granja Rezende’s financial investments; and (iii) R$1,425 (R$1,408 as of December 31, 2009) relating to other provisions.

CPMF over export revenues : BRF registered a provision for contingency in the amount of R$18,716 (R$22,745 as of December 31, 2009) regarding a judicial proceeding for the non-payment of the provisory contributions on financial activities (“CPMF”) charged on the income from exports. The Company’s lawsuit is currently at the Third Region Federal Court of Appeals (“TRF”), pending decision of an appeal.

ICMS : BRF is mainly involved in administrative and judicial tax disputes associated with the register of ICMS tax credits on certain transactions, such as the acquisition of consumption materials and the register of tax credits with monetary correction. The provision amounts to R$31,108 (R$34,075 as of December 31, 2009).

The subsidiary Sadia is involved in several administrative proceedings regarding ICMS, in a total amount of R$33,252 (R$30,376 as of December 31, 2009), mainly associated to customs clearance processes, debits arising from accessory obligations and register of credits on consumption materials.

PIS and COFINS : BRF is involved in an administrative proceeding regarding the utilization of tax credits to offset federal taxes, in the amount of R$34,888 (R$33,595 as of December 31, 2009).

Page: 1 2 4

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Other tax contingencies : t he subsidiary Sadia registered other provisions related to the payment of social security contributions, PIS tax, duties and other taxes in a total amount of R$40,316 (R$39,741 as of December 31,2009).

25.1.2. Labor

The Company is defendant in several labor claims in progress, mainly related to overtime and salary inflation adjustments for periods prior to the introduction of the Brazilian Real, illnesses allegedly contracted at work and work-related injuries and others. The labor suits are mainly in the lower courts, and for the majority of the cases a decision for the dismissal of the pleadings has been granted. None of these suits are individually significant. The Company recorded a provision based on past history of payments. Based on the opinion of the Company’s management and its legal counsel, the provision is sufficient to cover probable losses.

25.1.3. Civil, commercial and others

Civil contingencies are mainly related to lawsuits referring to traffic accidents, moral and property damage, physical casualties and others. The civil actions are mostly in the lower courts, in the evidentiary phase, depending on confirmation or absence of the Company’s guilt.

25.2. Contingencies and possible losses

The Company is involved in other tax, civil, labor and social security contingencies, for which losses have been assessed as possible, based on the analysis of Company’s management and its legal counsels.

The tax contingencies amounted to R$3,034,294 (R$2,896,378 as of December 31, 2009), of which R$578,493 (R$578,493 as of December 31, 2009) relate to the corresponding fair value estimate resulting from the business combination with Sadia (note 6), according to paragraph 23 of CVM Deliberation No. 580/09.

The most relevant aspects associated to the matter are listed below:

Profits earned abroad : On October 3, 2008, the subsidiary Perdigão Agroindustrial S.A. (merged on March 9, 2009) was assessed by the Internal Revenue Service which alleges the lack of collection of income tax and social contribution on profits earned by subsidiaries established abroad in 2003 and 2004, in the total amount of R$158,828 (R$155,763 as of December 31, 2009). The probability of loss related to

Page: 1 2 5

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

this case has been assessed as possible based on the fact that the subsidiary abroad is subject to full taxation in the country in which it is based and this determination is protected by the treaty signed between Brazil and Austria to avoid double taxation. A temporary favorable decision was granted to the Company, thus the estimated outcome is still considered possible.

ICMS : t he Company is involved in several administrative and judicial proceedings related to ICMS tax credits on the acquisition of essential products with a reduced tax burden (“cesta básica”) in the amount of R$275,421 (R$255,803 as of December 31, 2009); register of ICMS tax deemed credits in the amount of R$10,342 (R$82,043 as of December 31, 2009); ICMS tax benefits granted by certain states (“Guerra fiscal”) in the amount of R$949,575 (R$877,053 as of December 31, 2009) and R$515,298 (R$350,678 as of December 31, 2009) related to other cases. Company believes that the related leading-case related to essential products can be settled during year 2011.

PIS and COFINS on the payment of interest on shareholder’s equity : the Company has filed a lawsuit to challenge the levy of the PIS and COFINS taxes on the payment of interest on shareholders’ equity with respect to the 2002-2008 period for the PIS tax and to the 2004-2008 period for the COFINS tax at a total amount of R$42,512 (R$41,364 as of December 31, 2009). The company’s management and its outside counsel classify the chances of loss as possible, thus no provision has been recorded.

IPI Premium Credit : t he subsidiary Sadia is a defendant in a tax foreclosure in the amount of R$376,594 (R$364.599 as of December 31, 2009), related to the offset of IPI tax premium credits against other federal taxes. The subsidiary has offset the taxes based on a final and non appealable favorable decision.

Other tax contingencies : t he subsidiary Sadia has other pending administrative and judicial cases in the amount of R$460,012 (R$400,555 as of December 31, 2009) related to social security contributions R$118,968 (R$115,352 as of December 31, 2009), income tax, social contribution and withholding income tax R$142,875 (R$119,688 as of December 31, 2009), PIS and COFINS taxes R$111,600 (R$83,523 as of December 31, 2009), and others in the amount of R$86,569 (R$81,992 as of December 31, 2009).

Civil lawsuits : As of June 30, 2010, the wholly-owned subsidiary Sadia has other civil contingencies which were evaluated as possible losses by the Company’s management and legal advisors, and, therefore, no provision was recorded.

The subsidiary Sadia and some of its current and former executives were nominated

Page: 1 2 6

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

as defendant in five class actions suits arising from investors of American Depositary Receipts (“ADR’s”) issued by Sadia and acquired between April 30, 2008 and September 26, 2008 (Class Period). These claims were filed in the Southern District of New York court in the United States of America, seeking remediation in accordance with Securities Exchange Act of 1934 arising from losses on foreign exchange derivative contracts. By order of the American court, the five class actions suits were consolidated into a single case (class action) on behalf of the Sadia’s investors group. As allowed by the CVM Deliberation No. 594/09, paragraph 92, the Company’s Management has not disclosed additional information related to this legal suit because it could be harmful to its defense.

26. SHAREHOLDERS’ EQUITY

26.1. Capital stock

On June 30, 2010, the capital subscribed and paid by the Company is R$12,553,417,953.36 (twelve billion, five hundred and fifty-three million, four hundred and seventeen thousand, nine hundred and fifty-three Brazilian Reais and thirty-six cents), composed of 872,473,246 book-entry shares of common stock without par value. The realized value of the capital stock in the balance sheet is net of the expenses with public offering in the amount of R$92,947.

The Company is authorized to increase the capital stock, irrespective of amendment to the bylaws, up to the limit of 1,000,000,000 shares of common stock, in book-entry form, and without par value.

26.2. Breakdown of capital stock

BR GAAP and IFRS
Consolidated
06.30.10 12.31.09 01.01.09
Common shares 872,473,246 872,473,246 413,916,206
Treasury shares (2,288,382) (2,452,180) (860,970)
Outstanding shares 870,184,864 870,021,066 413,055,236

Page: 1 2 7

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

26.3. Capital stock rollforward

Quantity of Capital
shares amount
Capital subscribed in 12.31.09 436,236,623 12,461,756
Split of shares 436,236,623 -
Completion of issuance costs - (1,285)
Capital subscribed in 06.30.10 872,473,246 12,460,471

26.4. Treasury shares

The Company has 781,782 shares of treasury stock (after the stock split mentioned in item 26.1 above), acquired in previous fiscal years with funds from appropriated retained earnings, at the average cost of ninety-five cents of Brazilian Reais (R$0.95) per share, for future disposal or cancellation. The decrease in the number of shares of treasury stock took place because of the exercise of the stock options of Sadia executives.

On June 30, 2010, the Management´s Company recorded under treasury shares the total of 1,507,210 shares of its issuance and owned by the subsidiary Sadia, such shares were recorded in Sadia’s financial statements in the subgroup of marketable securities. These shares were received as proceeds from the sale of the interest in Concórdia Holding Financeira to HFIN Participações S.A. and are attached to a granted purchase option that can be exercised any time and will expire in 360 days. The treasury shares were recorded in shareholders’ equity at the acquisition cost and the difference between this amount and the amount recorded by Sadia was reclassified to other receivables.

Page: 1 2 8

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

27. EARNINGS (LOSSES) PER SHARE

06.30.10 06.30.09
Basic numerator:
Net income for the year attributable to BRF shareholders 232,570 (83,964)
Basic denominator:
Ordinary shares 872,473,246 413,916,206
Weighted average number of outstanding shares - basic (except treasury shares) 870,184,864 413,055,236
Net earnings per share - basic - R$ 0.2673 (0.2033)
06.30.10 06.30.09
Diluted numerator:
Net income for the year attributable to BRF shareholders 232,570 (83,964)
Diluted denominator:
Weighted average number of outstanding shares - basic (except treasury shares) 870,184,864 413,055,236
Weighted average number of potential shares 2,205,079 -
Weighted average number of outstanding shares - diluted 872,389,943 413,055,236
Net earnings per share - diluted - R$ 0.2666 (0.2033)

On June 30, 2010, the total quantity of 658,340 common stock options were not considered in the calculation of the diluted earnings per share due to the fact that the strike price was higher than the average market price of the common shares during the year and, therefore, the effect could not be diluted.

28. RELATED PARTIES – PARENT COMPANY

During its operations, rights and obligations are contracted between related parties, resulting from transactions of purchase and sale of products, transactions of loan agreed on normal conditions of market for similar transactions, based on contract.

28.1. Transactions and balances

On June 30, 2010, the balances of the assets and liabilities and transactions that influenced the result are demonstrated below:

Page: 1 2 9

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Balance sheet — 06.30.10 12.31.09 01.01.09
Accounts receivable
Perdigão Agroindustrial S.A. - - 29,064
Instituto Perdigão de Sustentabilidade - - 4,867
Sino dos Alpes Alimentos Ltda. - - 910
Avipal Nordeste S.A. - 11,219 8,957
VIP S.A. Empreendimentos e Participações Imobiliárias - - 1,772
UP! Alimentos Ltda. 3,223 2,684 -
Perdigão Europe Lda. 189,341 172,229 1,237
Perdigão International Ltd. 110,712 545,696 -
Sadia S.A. 8,447 5,886 -
311,723 737,714 46,807
Dividends and interest on the shareholders’ equity receivable
Avipal S.A. Construtora e Incorporadora 5 5 5
Sadia S.A. - 36,646 -
5 36,651 5
Loan contracts
Perdigão Agroindustrial S.A. - - (66,426)
Instituto Perdigão de Sustentabilidade 5,554 5,240 -
Avipal Nordeste S.A. - (3,328) -
Perdigão Trading S.A. (538) 2,467 -
Perdigão International Ltd. (12,305) (10,056) -
Highline International Ltd. (3,285) (3,175) -
Establecimiento Levino Zaccardi y Cia S.A. 4,198 4,058 7,874
(6,376) (4,794) (58,552)
Trade accounts receivable
Perdigão Agroindustrial S.A. - - 6,081
Sino dos Alpes Alimentos Ltda. 85 85 8,062
Avipal Nordeste S.A. - 14,404 24,961
VIP S.A. Empreendimentos e Participações Imobiliárias - - 89
UP! Alimentos Ltda. 2,882 1,706 3,813
Perdigão International Ltd. 1,350 1,209 -
Sadia S.A. 6,067 1,269 -
10,384 18,673 43,006
Advance for future capital increase
PSA Laboratório Veterinário Ltda. - 20,577 -
- 20,577 -
Other rights and obligations
Avipal Nordeste S.A. - 50,016 -
VIP S.A. Empreendimentos e Participações Imobiliárias (4) - -
Perdigão Trading S.A. 410 410 -
Perdigão International Ltd. (*) (1,044,586) (949,654) -
Establecimiento Levino Zaccardi y Cia S.A. 1,135 1,097 -
Avipal Centro Oeste S.A. (39) 43 -
Sadia S.A. 49 - -
(1,043,035) (898,088) -
(*) The amount refers to pre-payment export advance.

Page: 1 30

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

Statement of income — 06.30.10 06.30.09
Revenue
Perdigão Agroindustrial S.A. - 203,846
Sino dos Alpes Alimentos Ltda. - 5,505
Avipal Nordeste S.A. 45,049 84,532
VIP S.A. Empreendimentos e Participações Imobiliárias - 1,436
UP! Alimentos Ltda. - 1,750
Perdigão Europe Lda. 319,303 172,162
Perdigão International Ltd. 1,238,377 817,491
Sadia S.A. 89,420 -
1,692,149 1,286,722
Costs of goods
Perdigão Agroindustrial S.A. - (21,530)
Sino dos Alpes Alimentos Ltda. - (7,190)
Avipal Nordeste S.A. (89,168) (121,821)
VIP S.A. Empreendimentos e Participações Imobiliárias - (376)
UP! Alimentos Ltda. - (27,212)
Establecimiento Levino Zaccardi y Cia S.A. (1,630) -
Sadia S.A. (26,591) -
(117,389) (178,129)
Financial income, net
Perdigão Agroindustrial S.A. - (586)
Instituto Perdigão de Sustentabilidade 299 153
Avipal Nordeste S.A. (5,197) (102)
Perdigão Trading S.A. 142 11
Perdigão International Ltd. (32) (42)
Establecimiento Levino Zaccardi y Cia S.A. - 33
(4,788) (533)

All the companies listed above are controlled by BRF, except for UP! Alimentos Ltda. and K&S Alimentos S.A. which are affiliates.

The BRF participates in loan transactions, please find below a summary of the balances and rates charged for the transactions in excess of R$10,000 on the date of closing of the quarterly information:

Counterparty — Creditor Debtor Balance — 06.30.10 Interest rate
BFF International Perdigão International 792,869 1.8% p.a. + E.R. - US$
BFF International Wellax Food Comércio 544,106 8.00% p.a. + E.R. - US$
Crossban Holdings Perdigão International 174,950 Eurolibor + E.R. - EURO
Perdix International Foods Perdigão Holland BV 35,049 8.00% p.a. + E.R. - EURO
Perdigão Holland BV Plusfood BV 17,634 6.00% p.a. + E.R. - EURO
Sadia S.A. Instituto de Sustentabilidade Sadia 7,498 12% p.a.

Page: 1 31

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

28.2. Other related parties:

The wholly-owned subsidiary Sadia entered into an operational leasing agreement with FAF. The total rent expense for the six month period ended June 30, 2010 amounted R$5,310, the lease monthly payments were established in an arms-length transaction basis.

The wholly-owned subsidiary Sadia entered in a loan with the Instituto de Sustentabilidade Sadia. As of June 30, 2010 the total of receivables amounted to R$7,498 the interest rate agreed is 12% p.a.

28.3. Management remuneration:

The key personnel of management include the directors and officers, members of the executive committee and the chief of internal audit, on June 30, 2010, there were 24 professionals in parent company and 41 professionals in consolidated and on December 31, 2009, 24 professionals in parent company and 67 professionals in consolidated.

The total remuneration and benefits paid to these professionals are demonstrated below:

BR GAAP and IFRS
Consolidated
06.30.10 06.30.09
Salary and profit sharing 22,322 13,042
Short-term benefits of employees (a) 732 577
Post-employment benefits 81 50
Severance benefits 2,619 2,514
Stock-based payment 317 -
26,071 16,183
(a) Comprises: Medical assistance, educational expenses and others.

The value of the participation in the results paid to each officer in any fiscal year is related especially to the net income of the Company and to the assessment of the performance of the director during the fiscal year by the Board of Directors.

The supplementary members of the Board of Directors and of the Audit Committee are compensated for each meeting that they attend to. The members of the Board of Directors and Audit Committee have no employment connection with the Company or provide services of any kind.

When the management and employees attain the age of 61 years, retirement is

Page: 1 32

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

mandatory.

All relationship among related parties were disclosed regardless if there were transactions between such parties.

All transactions and balances among related parties were properly eliminated for consolidation purposes and might be commercial or financial.

29. SALES REVENUE

BR GAAP — Parent company BR GAAP and IFRS — Consolidated
06.30.10 06.30.09 06.30.10 06.30.09
Income revenue:
Domestic sales 3,921,241 2,842,343 7,568,830 3,707,196
Foreign sales 1,968,730 1,460,037 4,560,439 2,354,970
5,889,971 4,302,380 12,129,269 6,062,166
Deductions from gross revenue:
Sales tax (573,736) (409,394) (1,275,744) (588,538)
Refunds and rebates (167,576) (131,222) (274,571) (167,598)
(741,312) (540,616) (1,550,315) (756,136)
5,148,659 3,761,764 10,578,954 5,306,030

30. RESEARCH AND DEVELOPMENT

Consists of expenditures with internal research and development of new products, recognized, when incurred in the statement of income. The total expenditure with research and development for the six month period ended June 30, 2010 was R$10,301 at the parent company and R$12,929 in the consolidated (R$6,735 at the parent company and in the consolidated on June 30, 2009).

Page: 1 33

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

31. EXPENSES WITH EMPLOYEE’S REMUNERATION

BR GAAP — Parent company BR GAAP and IFRS — Consolidated
06.30.10 06.30.09 06.30.10 06.30.09
Salaries and social charges 482,027 348,951 1,069,101 448,195
Social security cost 117,182 79,251 254,484 110,691
F.G.T.S. 33,316 23,042 33,814 31,837
Medical and outpatient assistance 24,787 15,679 25,882 21,755
Supplementary retirement plan 3,287 2,040 10,058 3,091
Profit sharing 32,100 - 34,401 -
Other benefits 85,851 60,115 88,526 90,949
Provision for contingencies 17,191 6,693 16,150 8,436
795,741 535,771 1,532,416 714,954

32. OTHER OPERATING REVENUES (EXPENSES), NET

BR GAAP — Parent company BR GAAP and IFRS — Consolidated
06.30.10 06.30.09 06.30.10 06.30.09
Revenues:
Net gains from the disposal of fixed assets - - 14,139 11,168
Insurance indemnity 6,703 108,539 6,545 108,874
Benefit plan - - 29,938 -
Expenses recovery 5,585 - 5,585 -
Other revenues - 1,305 145 2,108
12,288 109,844 56,352 122,150
Expenses:
Net losses on disposal of fixed assets (1,005) (3,418) (1,048) -
Net losses on disposal of investments (30) - - -
Idleness costs (32,116) (15,163) (32,293) (24,067)
Insurance claim losses (4,803) (120,729) (46,296) (118,890)
Employee participation (48,140) - (51,412) -
Other employee benefits (9,608) (7,372) (13,580) (7,368)
Provision for civil risks (8,136) - (8,136) -
Other expenses (274) (3,060) (9,462) (12,627)
(104,112) (149,742) (162,227) (162,952)
Other operating expenses, net (91,824) (39,898) (105,875) (40,802)

Page: 1 34

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

33. FINANCIAL INCOME (EXPENSES), NET

BR GAAP — Parent company BR GAAP and IFRS — Consolidated
06.30.10 06.30.09 06.30.10 06.30.09
Financial revenues:
Interest on financial investments 2,528 1,373 7,738 14,858
Foreignexchange variation on financial investments 19,584 73 24,679 19,250
Interest on assets 12,312 11,960 94,073 14,670
Foreign-exchange variation on assets 39,311 1,201 40,410 61,587
Interest of financial assets classified as: 40,908 16,088 101,211 27,049
Available for sale - - 26,276 1,887
Held for negotiation 40,908 16,088 74,935 25,162
Gains from transactions with derivatives 21,822 - 13,147 7,663
Revenue from the interest on loans to related parties 441 829 4,528 856
Gains from the conversion of investments abroad - - 59,776 23,339
Present value adjustments 22,116 - 58,163 -
Revenue from foreign exchange variation on loans 91,343 419,232 82,440 429,599
Revenue from foreign exchange variation on other liabilities 122,249 298,924 132,382 293,011
Financial revenues from the acquisition of raw materials 3,363 4,936 3,363 4,936
Other revenues 7,574 3,414 40,136 4,441
383,551 758,030 662,046 901,259
Financial expenses:
Interest on loans (78,974) (80,004) (269,275) (131,418)
Foreign exchange variation on loans (153,600) (32,094) (246,713) (64,916)
Interest on liabilities (11,916) (7,671) (12,398) (9,871)
Foreign-exchange variation on liabilities (140,408) (580) (115,914) (45,631)
Financial expenses on the acquisition of raw materials (939) (7,094) (939) (17,726)
Losses from transactions with derivatives (56,003) (184,360) (51,584) (183,664)
Losses from the conversion of investments abroad - - (120,771) (181,125)
Interest expenses on loans to related parties (46,046) (32,837) - -
Present value adjustments (24,539) - (56,407) -
Expense from foreign exchange variation on investments (15,225) (5,888) (12,655) (696)
Expense from foreign exchange variation on other assets (44,486) (135,920) (40,879) (139,199)
Other expenses (4,451) (37,912) (34,759) (59,765)
(576,587) (524,360) (962,294) (834,011)
Financial income (expense), net (193,036) 233,670 (300,248) 67,248

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FEDERAL PUBLIC DEPARTMENT

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ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

34. STATEMENT OF INCOME BY NATURE

The Company presents its statement of income by function and thus is presented below the statement of income by nature:

BR GAAP — Parent company BR GAAP and IFRS — Consolidated
06.30.10 06.30.09 06.30.10 06.30.09
Costs of sales:
Costs of inventories 3,185,572 2,497,679 6,048,143 3,225,527
Depreciation 152,025 139,697 290,893 200,954
Amortization 158 - 18,938 -
Salaries and benefits to employees 584,644 387,796 1,113,647 552,491
Others 330,555 242,310 632,361 344,712
4,252,954 3,267,482 8,103,982 4,323,684
Administrative expenses:
Depreciation 1,768 3,686 1,623 4,973
Amortization 1,759 - 4,333 -
Salaries and benefits to employees 40,328 31,023 62,819 43,443
Others 58,243 22,875 89,272 27,879
102,098 57,584 158,047 76,295
Expenses from sales:
Depreciation 6,939 4,290 9,300 7,199
Amortization 26 - 7,584 -
Salaries and benefits to employees 145,199 95,423 346,441 145,148
Others 492,047 370,978 1,286,066 711,456
644,211 470,691 1,649,391 863,803

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FEDERAL PUBLIC DEPARTMENT

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ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

35. I NSURANCE COVERAGE– CONSOLIDATED

The Company adopts the policy of contracting insurance coverage for assets subject to risks in amounts sufficient to cover any claims, considering the nature of its activity. The assumptions and risks adopted, given their nature, are not part of the scope of an audit and, therefore, were not reviewed by our independent accountants.

06.30.10
Not reviewd
Values at Amount of
Insured property Coverage risk coverage
Fire, lightning, explosion, windstorm, deterioration
Inventories and fixed assets of refrigerated products, breakdown of machinery,
loss of profit, and others 15,575,730 979,301
National transport Road risk and civil Liability of cargo carrier 23,604,930 10,290,259
International transport exports - 2,375,189 1,308,454
International transport imports - 358,000 395,590
General civil liability and for directors and officers Third party complaints 48,822,376 226,567
Credit Client default 4,534,751 10,390,298

36. NEW RULES AND PRONOUCEMENTS NOT ADOPTED

The interpretations and amendments to the rules existent below, applicable to the following accounting periods, were published by IASB and its application to the financial statements of the Company to be filed with CVM (the Brazilian Securities Commission) only if there is a Deliberation by that agency, therefore, there was no anticipated adoption of these rules.

IFRIC 19 Termination of the financial liabilities with property instruments:

On November 2009, IFRIC issued interpretation 19. The interpretation explained the recording by an entity when the periods for a financial liability are renegotiated and result in the issuance by the entity of property instruments to a creditor of the entity to terminate all or part of the financial liability (conversion of the debt). This requires that a gain or loss must be acknowledged in the result, which is measured as the difference between the book value of the financial liability and the fair value of the property instruments issued. If the fair value of the financial instruments issued cannot be measured in a reliable manner, the property instruments must be measured to reflect the fair value of the terminated financial liability. The Company is assessing the possible effects that may result from the adoption of this statement and one does not expect the existence of a significant impact on the statements of the Company or controller. This statement will apply to the financial statements for the fiscal years initiated on or after July 1, 2010.

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*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

IFRIC 14 Pre-payments of applications of minimum investments:

On November 2009, IFRIC issued amendments to interpretation 14. The amendments sought to permit the acknowledgment as an asset of some voluntary anticipated payments to minimum contributions to funds. The Company is assessing the possible effects that may result from the adoption of this statement and one does not expect the existence of a significant impact on the statements of the Company. The amendments apply to the financial statements for the fiscal years initiated on or after January 1, 2011.

IFRS 7 Disclosures of transfers of financial assets:

On January 2010, IASB issued changes to IFRS 1 and IFRS 7, which address aspects of disclosure of comparative information of financial instruments. These amendments are effective for yearly periods initiated on/or after July 1, 2010. The Management of the Company understands that the amendments to this interpretation will not affect the financial statements.

IAS 32 Classification of issuance of rights:

On October 2009, IASB issued a review of rule IAS 32, which deals with contracts that will be or may be liquidated by means of property instruments of the entity and establish that rights, options or guarantees to acquire a fixed quantity of shares of an entity for a fixed amount of some currency are property instruments. The amendment to this rule is effective for yearly periods initiated on/or after February 1, 2010. The amendments to this rule shall not impact the financial statements of the Company.

Improvements on IFRSs 2010:

In May 2010, IASB issued a review of rules IFRS 3, IAS 1, IAS 27, IAS 34 and IFRIC 13. The amendment to rule IFRS 3 is effective for the yearly periods starting on/or after July 1, 2010. The other changes to the rules are effective for yearly periods starting on/or after January 1, 2011. The Company is assessing the impacts of the adoption of these changes of rules on its financial statements.

37. SUBSEQUENT EVENTS

On May 10, 2011 as diclosed through the annoucement to the market issued by the Company the Federal Government Attorney’s Office at the CADE has published a report PROCADE 8012.004423/2009-18 on the business combination

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FEDERAL PUBLIC DEPARTMENT

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ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

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*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

transaction involving Sadia and BRF (previously denominated Perdigão).

PROCADE has suggested to the CADE that the transaction be approved, conditional to certain restrictions, considering:

(i) effectively permit a third economic entity to contrast the marketing power generated by BRF; and/or

(ii) allow BRF to share with consumers the efficiencies resulting from the transaction.

According to the Report, the hypothesis of rejection of the transaction would only arise should no alternative be found that meets the requirements indicated.

PROCADE’s report is neither final nor binding being a supporting document to the final ruling on the transaction to be issued by CADE, which is not limited to the terms of the report.

38. APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS

The restatement of the quarterly information for the three and six month period ended on June 30, 2010 was approved and its disclosure authorized by the Board of Directors on May 11, 2011.

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FEDERAL PUBLIC DEPARTMENT

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06.01 – EXPLANATORY NOTES

BOARD OF DIRECTORS
Co-Chairman Nildemar Secches
Co-Chairman Luiz Fernando Furlan
Vice-Chairman Francisco Ferreira Alexandre
Board Members Carlos Alberto Cardoso Moreira
Board Members Manoel Cordeiro Silva Filho
Board Members João Vinicius Prianti
Board Members Décio da Silva
Board Members Rami Naum Goldfajn
Board Members Luís Carlos Fernandes Afonso
Board Members Walter Fontana Filho
Board Members Roberto Faldini
AUDIT COMMITTEE
Chairman and Financial Specialist Attílio Guaspari
Council Members Osvaldo Roberto Nieto
Council Members Jorge Kalache Filho
BOARD OF EXECUTIVE OFFICERS
Chief Executive Officer José Antônio do Prado Fay
Vice President of Strategy and M&A Nelson Vas Hacklauer
Vice President of Finance, Administration and Investor Relations Leopoldo Viriato Saboya
Vice President of Operations and Technology Nilvo Mittanck
Vice President of Foreign Market Antônio Augusto de Toni
Vice President of Human Resources Gilberto Antônio Orsatto
Vice President of Dairy Operations Fábio Medeiros Martins da Silva
Vice President of Supply Chain Luiz Henrique Lissoni
Vice President of Corporate Affairs Wilson Newton de Mello Neto

Marcos Roberto Badollato

Controllership Manager

Renata Bandeira Gomes do Nascimento

Accountant - CRC 1SP 215231/O-3

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FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

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*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

OPINION OF THE FISCAL COUNCIL

The Fiscal Council of BRF - Brasil Foods S.A., in fulfilling its statutory and corporate functions, examined:

(i) the unqualified special review report issued by KPMG Auditores Independentes related to the quarterly information for the three and six month period ended June 30, 2010;

(ii) the Management’s Report for the three and six month period ended June 30, 2010

(iii) the quarterly information (parent company and Consolidated) for the three and six month period ended June 30, 2010.

Based on the documents examined and on the explanations provided, the members of the Fiscal Council, undersigned, issued an opinion for the approval of the quarterly information above identified.

São Paulo, May 11, 2011.

Attílio Guaspari

Fiscal Council President and

Financial Expert

Osvaldo Roberto Nieto

Fiscal Council Member

Jorge Kalache Filho

Fiscal Council Member

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FEDERAL PUBLIC DEPARTMENT

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ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

06.01 – EXPLANATORY NOTES

STATEMENT OF EXECUTIVE BOARD ON THE CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT

In compliance with the provisions of sections V and VI of article 25 of CVM Instruction No. 480/09, the executive board of BRF - Brasil Foods S.A., states:

(i) reviewed , discussed and agreed with the Company's quarterly information for the three and six month period ended June 30, 2010; and

(ii) reviewed, discussed and agreed with the unqualified special review report issued by KPMG’s related to the quarterly information for the three and six month period ended June 30, 2010.

São Paulo, May 11, 2011.

José Antônio do Prado Fay

Chief Executive Officer Director

Nelson Vas Hacklauer

Strategy and M&A Executive Officer

Leopoldo Viriato Saboya

Chief Financial, Administrative and IR Officer

Nilvo Mittanck

Operations and Technology Executive Officer

Antônio Augusto de Toni

Export Market Executive Officer

Gilberto Antônio Orsatto

Human Resources Executive Officer

Fábio Medeiros Martins da Silva

Dairy Product Operations Executive Officer

Luiz Henrique Lissoni

Supply Chain Executive Officer

Wilson Newton de Mello Neto

Corporate Affairs Executive Officer

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FEDERAL PUBLIC DEPARTMENT

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ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

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*RESTATEMENT*

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

07.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Comments, see table 12.01.

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*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

2nd Quarter 2010

Dear Shareholders

BRF – Brasil Foods S.A. (BM&FBOVESPA: BRFS3 and NYSE: BRFS) announces its financial statements for the second quarter 2010 (2Q10), the good performance confirming the gradual and consistent recovery already forecast for the main markets in which the Company operates. BRF reported its best operating cash generation since the onset of the global financial situation.

Net sales were R$ 5.5 billion, a growth of 104.6% compared with 2Q09 and 9.6% higher in relation to 1Q10, a reflection of both a good performance in the domestic market and also BRF’s improved penetration in such important markets as Asia and Eurasia. The Company posted EBITDA of R$ 614.3 million, 351% higher and reflecting an EBITDA margin of 11.1%, with net income reaching R$ 171.5 million, a 3.1% net margin on a pro-forma basis. The reduction in costs and operating expenses also contributed to improved results.

We have recently made progress towards ensuring the Company’s growth with such initiatives as the services agreement with Cooperativa Copercampos in the state of Santa Catarina and designed to meet the requirements of the export market and to optimize industrial processes, with gains in efficiency and competitive advantage in this activity as from next year.

The Perdigão and Sadia brand names, both under the BRF umbrella, were rated as the most valuable in the Brazilian food sector. This was reflected in the ranking prepared by BrandAnalytics/Millward Brown in partnership with IstoÉ Dinheiro magazine and based on last year’s financial and capital markets data as well as BrandZ market research. The total market value of the two brands doubled from R$ 1.9 billion in 2008 to R$ 3.6 billion in 2009.

BRF was elected the best company of the year in the “The Best of Dinheiro – 2010” in the special edition of IstoÉ Dinheiro magazine and the result of outstanding performance in Corporate Governance, Financial Sustainability and Social Responsibility. Undoubtedly this is further recognition of commitment to the Company’s values on the part of both management and our more than 100 thousand employees.

On June 30, the Finance Ministry’s Economic Monitoring Secretariat (SEAE) published its report on the corporate operation merging Sadia and Perdigão to form BRF. SEAE has recommended to the Administrative Council for Economic Defense (CADE) that the operation be approved with restrictions. BRF has pointed out in an announcement to the market that it is convinced that there are sufficient technical arguments that can be made to CADE for approval without qualification: the Company sees the operation as both pro-competition and also as reinforcing Brazil’s penetration and competitiveness in export markets. BRF remains confident that CADE will fully approve the operation in

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FEDERAL PUBLIC DEPARTMENT

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ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

view of the absence in Brazil of any significant entry barriers, the existence of intense market rivalry and the potential for capturing major synergies and efficiencies.

While we are still unable to integrate important operations, we are advancing our established strategies and managing our businesses in parallel with the strengthening of our export operating base through portfolio, customer and market diversification set against a background of gradual recovery in the leading international markets. We are also focusing our efforts on the potential for growth in the consumption of processed foods in the domestic market given improving economic indicators in Brazil.

Studies carried out by the OECD and FAO point to Brazil as the country with the best potential for growth in world agribusiness due to the latter’s competitive advantages, confirming our conviction as to the opportunities identified allowing BRF to supply the global market with food which is both tasty and high quality.

São Paulo, August 2010.

José Antonio do Prado Fay

Chief Executive Officer

Luiz Fernando Furlan Co-Chairman of the Board of Directors Nildemar Secches Co-Chairman of the Board of Directors

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FEDERAL PUBLIC DEPARTMENT

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ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

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*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Operating and Financial Indicators

2 nd Quarter 2010

Corporate Law

Net sales reached R$ 5.5 billion, 104.6% higher due to the consolidation of Sadia’s results.

Total sales volume from the meats, dairy and processed products businesses were 1.4 million tons, 97.3% higher.

Gross profits totaled R$ 1.4 billion, an increase of 159.8%.

EBITDA reached R$ 614.3 million, 351% higher year-on-year due to sales performance, and a reduction in costs and expenses.

Net income was R$ 171.5 million, equivalent to a net margin of 3.1%.

Financial trading volume in the Company’s shares averaged US$ 48.2 million/day during the year, a 94.4% improvement.

Pro-forma

Net sales reported an increase of 4.8%, a reflection of the gradual improvement in exports and a better performance in the domestic market.

Sales of meats, dairy products and other products recorded an increase of 10.5%.

Gross profits rose 19.1% thanks to sales performance and the reduction in production costs.

EBITDA increased 64.1%, a 400 basis points improvement equivalent to an EBITDA margin of 11.1% due to a better operating result on the back of costs savings and reduced expenses.

Net income was R$ 171.5 million, equivalent to a net margin of 3.1%.

HIGHLIGHTS — R$ MILLION Corporate Law — 2Q10 2Q09 % Ch. Pro forma — 2Q10 2Q09 % Ch.
Net Sales 5,532 2,703 105% 5,532 5,276 4.8%
Domestic Market 3,157 1,523 107% 3,157 2,935 8%
Exports 2,374 1,180 101% 2,374 2,341 1%
Gross Profit 1,350 520 160% 1,350 1,134 19%
Gross Margin 24.4% 19.2% 520 bps 24.4% 21.5% 290 bps
EBIT (1) 398 28 1314% 398 132 202%
Net Income 171 138 24% 171 480 (64%)
Net Margin 3.1% 5.1% (200 bps) 3.1% 9.1% (600 bps)
EBITDA 614 136 351% 614 374 64%
EBITDA Margin 11.1% 5.0% 610 bps 11.1% 7.1% 400 bps
Earnings per Share (2) 0.20 0.33 - 0.20 2.33 -
(1) Operating income before other operating results and equity accounting
(2) Consolidated earnings per share (in R$), excluding treasury shares

(The variations mentioned in this report are comparisons between first half of 2010 (1H10) and the first half of 2009 (1H09) or the 2 nd quarter of 2010 (2Q10) in relation to the 2 nd quarter 2009 (2Q09). Sadia’s results have been consolidated as from July 2009. For a better understanding of the businesses, the variations are compared in numbers according to Brazilian corporate law (CL) and on a pro-forma basis, as specified. The pro-forma financial statements are to be found in attachments II, III and IV of this report).

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FEDERAL PUBLIC DEPARTMENT

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12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Quarterly Ebitda – Pro-forma

Operating and Financial Information

1 st Half 2010

HIGHLIGHTS — R$ MILLION Corporate Law — 1H10 1H09 % Ch. Pro forma — 1H10 1H09 % Ch.
Net Sales 10,579 5,306 99% 10,579 10,337 2%
Domestic Market 6,142 3,010 104% 6,142 5,787 6%
Exports 4,437 2,296 93% 4,437 4,550 (2%)
Gross Profit 2,475 982 152% 2,475 2,025 22%
Gross Margin 23.4% 18.5% 490 bps 23.4% 19.6% 380 bps
EBIT (1) 668 42 1480% 668 56 1082%
Net Income 233 (84) - 233 18 1171%
Net Margin 2.2% (1.6%) - 2.2% 0.2% 200 bps
Adjusted Net Income (2) 233 48 384% 233 150 55%
Adjusted Net Margin 2.2% 0.9% 130 bps 2.2% 1.5% 70 bps
EBITDA 1,058 252 320% 1,058 547 94%
EBITDA Margin 10.0% 4.7% 530 bps 10.0% 5.3% 470 bps
Earnings per Share (3) 0.27 (0.41) - 0.27 0.09 -
(1) Operating income before other operating results and equity accounting
(2) Adjusted Net Income - Excluding the absorption of the tax loss relative to the incorporation of Perdigão Agroindustrial S.A. booked to first quarter results 2009.
(3) Consolidated earnings per share (in R$), excluding treasury shares

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FEDERAL PUBLIC DEPARTMENT

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*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Sectoral Performance

Following a highly unstable first half due to market concern surrounding the fiscal situation in Greece, Spain, Ireland and Italy, the financial markets returned to a degree of equilibrium as soon as these countries had successfully raised the necessary funds to cover short-term maturities.

However, if on the one hand Europe ceased to be the principal source of stress, on the other, macroeconomic indicators released during the course of the second quarter in the United States showed economic recovery slower than many economists had forecast. This unleashed a further round of anxiety in the markets with fears that the global growth trajectory might not be sustainable without further quantitative easing on the part of governments.

In Brazil, government stimulus measures to foster consumption such as the reduction in the IPI excise tax on cars and white line goods resulted in an anticipation of purchases and as a consequence, a second quarter of slacker demand.

As a result, inflation rates eased leading market analysts to review downwards their forecasts for the IPCA inflation index in 2010 as well as for interest rates, the outlook for which is also likely to be reexamined with a similar conclusion.

Exports – Physical chicken exports in 2Q10 rose by 13% in relation to 1Q10, but fell slightly (0.6%) compared to 2Q09 while sales of beef reported a 12.7% year on year improvement. On the other hand shipments of pork fell 9.7%, due to a decline in exported volume to leading markets.

As in 1Q10, prices remained high, those of exported chicken increasing 11%, pork by 31% and beef, 21%, all relative to 2Q09.

Domestic Consumption – Unemployment rates as reported by the Brazilian Government Statistics Office (IBGE) fell from 7.5% of the Economically Active Population (EAP) in May 2010 to 7.0% in June. Real incomes grew 2.9% between January and May compared with the same period in 2009, which together with the greater numbers in work, boosted consumer confidence to historically record highs.

The 12-month rolling accumulated food inflation rate fell from 6.9% p.a in April to 5.1% p.a in June, symptomatic of declining foodstuff prices and increasing disposable income.

On the financial front, personal interest rates rose at the same time that the Central Bank increased the basic rate of interest so also increasing the cost of consumer credit for durable goods.

Raw Materials – Between April and June 2010, average corn prices in the domestic market increased 6% compared with 1Q10, although relative to 2Q09 recording a decline of 15.5%. The rising tendency in margin during 2Q10 is due to retention of stocks as producers speculate on climatic conditions for the second annual corn crop in view of lower than average rainfall in the states of Mato Grosso and Goiás reducing potential crop volumes.

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12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Average soybean prices in 2Q10 fell 3.1% against 1Q10 and 28% compared with 2Q09. High levels of world inventory contributed to weaker prices in the period. The average price of milk collection increased 17% in relation to 2Q09.

Outlook - The global economy can be expected to report a slight deceleration during 2H10, principally in the light of the phasing out of government-inspired quantitative easing measures. Despite weakening consumer confidence in the advanced economies, consumption is not expected to dip since unemployment rates are gradually improving. Some volatility may occur in the financial markets with the announcement of weak economic data in the USA but any reversal in growth trajectories is not expected.

In Brazil, prospects are for incomes and employment to continue growing during the second half in tandem with increased interest rates and an end to further lengthening of repayment terms for consumer credit. This will tend to maintain growth in non-durables which are less sensitive to credit conditions but more impacted by income.

Investments and Projects

Capital expenditures in the quarter were R$ 151.2 million and largely dedicated to projects for increasing productivity and modernization as well as for projects for new industries currently under construction, including Lucas do Rio Verde-MT and Vitória do Santo Antão-PE. Investments in poultry and hog breeder stock amounted to R$ 99.1 million. Total first half investments were R$ 417.9 million, including R$ 181.7 million in replacement of breeder stock

Investments

On April 29 2010, as mentioned above, the Company signed a services agreement with Cooperativa Copercampos, state of Santa Catarina, which includes the

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12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

engagement of future industrial capacity of the plant currently under construction in the municipality of Campos Novos for hog slaughtering. The unit is to be equipped for selling its production to the leading world markets. The unit will operate at a slaughtering capacity of seven thousand head/day, enabling it to meet the needs of a demanding export market. The cooperative estimates total investments in the project at R$ 145 million. Slaughtering operations are expected to begin in the first quarter de 2011.

Operating Performance

Production

PRODUCTION Pro forma — 2Q10 2Q09 % Ch. Pro forma — 1H10 2H09 % Ch.
Poultry Slaughter (million heads) 406 384 6% 791 735 8%
Pork/Cattle Slaughter (thousand heads) 2,624 2,525 4% 5,150 5,029 2%
Production (thousand tons)
Meats 1,000 925 8% 1,941 1,815 7%
Dairy Products 279 234 19% 530 498 6%
Other Processed Products 113 106 6% 221 207 7%
Feed and Premix (thousand tons) 2,711 2,605 4% 5,310 5,079 5%

Reflecting the market recovery, meat production returned to a growth mode, reporting year on year increase of 8.1% in 2Q10 and 6.9% in 1H10, compared to the same period last year.

Domestic Market

Net sales amounted to R$ 3.2 billion, 107.4% greater on a Brazilian Corporate Law basis and 7.6% higher on a pro-forma comparative basis. Overall, demand remained strong , particularly for elaborated and convenience foods. The period of the World Cup proved to be a strong driver for all our product categories and was responsible for substantial investment in supporting the penetration of brands generally in our markets. Competitive pressure was intense but on the whole our market share remained at solid levels.

The second quarter was also marked by renewed innovations under the Sadia and Perdigão brand names, some of which have proved highly successful. The frozen "escondidinho" ready-to-eat product launched by Sadia in a test area and Perdigão’s “my menu” frozen product line have been performing well above forecast - indicative of the major potential for innovations in our product categories.

The focus of growth in the food service business was on processed products, this helping to improve returns for this channel of business and showing that growth in the away–from– home food market is consistent.

Page: 1 50

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Domestic Market Sales - CL

Domestic Market THOUSAND TONS — 2Q10 2Q09 % Ch. R$ MILLION — 2Q10 2Q09 % Ch.
Meats 431 181 138 1,928 766 152
In Natura 91 32 182 424 127 234
Poultry 54 25 114 209 91 128
Pork/Beef 37 7 424 215 35 510
Elaborated/Processed (meats) 340 149 128 1,505 639 135
Dairy Products 273 233 17 569 552 3
Milk 226 181 25 412 379 9
Dairy Products 46 52 (10) 157 173 (9)
Other Processed 116 27 322 518 119 336
Soybean Products/ Others 98 53 84 142 86 66
Total 917 494 85 3,157 1,523 107
Processed 502 228 120 2,180 931 134
% Total Sales 55 46 69 61
Domestic Market THOUSAND TONS — 1H10 1H09 % Ch. R$ MILLION — 1H10 1H09 % Ch.
Meats 843 363 132 3,778 1,530 147
In Natura 174 71 145 786 261 201
Poultry 103 56 83 394 192 105
Pork/Beef 71 15 383 392 69 470
Elaborated/Processed (meats) 669 293 129 2,992 1,269 136
Dairy Products 530 484 10 1,110 1,054 5
Milk 433 382 13 782 710 10
Dairy Products 97 102 (4) 328 343 (5)
Other Processed 223 54 316 984 230 328
Soybean Products/ Others 190 206 (8) 270 196 38
Total 1,786 1,107 61 6,142 3,010 104
Processed 990 448 121 4,304 1,842 134
% Total Sales 55 40 70 61

Meat – Sales revenue in 2Q10 rose 151.7% on a CL basis and 6.2% in pro-forma terms. Volumes increased 7.5%, recording a gain of 540 basis points in returns on added value products. However, average product prices were 1.2% less due to a 15.8% increase in in-natura items where prices are lower. Government sponsored regulations and controls resulted in higher sales of in natura products equalizing competition in the sector.

Page: 1 51

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Dairy Products – Product volumes rose 17.1% in 2Q09 and equivalent to a 3.1% increase in revenues, contributing to the improvement in results from this segment in relation to 1Q10. Although sales performance has been better, the average cost of milk collection increased, partially reducing margins for this segment. On a year on year comparative basis, sales prices were down due to an extremely positive performance in 2009 against 12% lower average prices in 2Q10.

Other processed products – With revenues and volumes 336% and 322% higher, respectively in terms of corporate law criteria and 19.6% and 10.8% up respectively, on a pro-forma comparative basis, the segment posted an improvement of 160 basis points in operating result. The Qualy brand turned in a particularly strong performance on the back of a fresh advertising campaign .

Market Share - %

In Volumes

Source: Ac Nielsen – Accumulated 2010

** Preliminary data*

Exports

On the export market sales front, performance improved both in relation to 2Q09 (550 additional basis points of EBIT) and also 1Q10 (430 basis points) on a pro-forma basis as important markets began to recover, principally in Asia and Eurasia.

Under this scenario we are forecasting a favorable outlook for our business over the next few months and contrary to the situation experienced during the previous year due to the crisis in the world economy.

Exports totaled R$ 2.4 billion, an increase of 101.1% in sales revenue and 115.1% by

Page: 1 52

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

volume according to corporate law criteria. On a pro-forma basis export market sales increased by 1.4% in sales revenue and 9.9% in volume, average prices being off by 7.7% in Brazilian Reals, although average prices in US dollars FOB (Free on Board) rose 8.4%. The average currency translation impact was 12.3% in 2Q10 compared with 2Q09 resulting in a decline in prices in domestic currency terms and consequently, in export revenues.

Meat – Meat volumes posted an increase of 114.6% while sales revenue was 100.5% higher based on CL criteria. In pro-forma terms, growth was 2.3% in export sales revenue and 10.2% in volume, respectively, with a fall of 7.2% in average prices in Brazilian Reals, again reflecting the currency translation effect.

Dairy Products – 2Q10 recorded a reduction in shipped dairy product volume of 19% due to a scenario of weaker international demand and inventory levels still high in the principal producing regions. This was despite a recovery in average prices of 8.1% in Brazilian Reals with the business focused principally on markets in the Middle East and Africa and an improved export mix.

Export Markets – CL

Exports 2Q10 2Q09 % Ch. 2Q10 2Q09 % Ch.
Meats 613 285 115 2,353 1,173 101
In Natura 525 245 115 1,955 955 105
Poultry 452 202 124 1,557 758 106
Pork/Beef 73 43 71 398 197 101
Elaborated/Processed (meats) 87 41 114 398 218 82
Dairy Products 1 1 (19) 6 7 (12)
Milk 0 1 (96) 0 5 (97)
Dairy Products 1 0 122 6 2 185
Other Processed 3 0 - 15 0 -
Total 616 287 115 2,374 1,180 101
Processed 91 42 117 419 221 90
% Total Sales 15 15 18 19

Page: 1 53

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Exports THOUSAND TONS — 1H10 1H09 % Ch. R$ MILLION — 1H10 1H09 % Ch.
Meats 1,139 562 103 4,396 2,282 93
In Natura 968 480 102 3,600 1,841 96
Poultry 828 402 106 2,862 1,466 95
Pork/Beef 140 78 79 738 375 97
Elaborated/Processed (meats) 171 82 109 796 440 81
Dairy Products 2 2 (25) 11 13 (17)
Milk 0 2 (89) 1 9 (90)
Dairy Products 2 1 102 10 4 144
Other Processed 4 0 - 30 1 -
Total 1,145 564 103 4,437 2,296 93
Processed 177 83 113 836 446 88
% Total Sales 15 15 19 19

The Company reported the following performance in its leading export markets in the period:

Europe – With the European economy continuing to perform weakly in certain countries such as Portugal, Ireland, Greece and Spain, it proved impossible to restore business to normal levels. Nevertheless the Company improved on its results compared to 2Q09.

Middle East – This market remains fully supplied due to the focusing of export flows from the United States and Brazil, with a knock on effect in lower average prices.

Far East – Japan continued to report a recovery in prices during 2Q10 with volumes holding steady. China also posted improvements both in prices and volumes.

Eurasia – The improvement in prices and volumes to the Eurasian market was sustained, both for poultry as well as pork products given the Russian ban on imports of these products from the United States.

Africa, Americas and Other Countries – Stronger demand from Africa was responsible for better volumes and prices, in particular for processed products. The market indicates a tendency towards equilibrium with the possibility of improvement in the next few months . In the case of the Venezuelan market, demand was enhanced due to the regularization of monthly shipments.

Page: 1 54

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Net Sales – Net sales reached R$ 5.5 billion in 2Q10, an increase of 104.6%, reflecting the incorporation of Sadia’s results, and growing 4.8% against 2Q09 on a pro-forma comparative basis, due to good domestic market performance and a recovery in exports .

For the first six months, the Company reported net sales revenue of R$ 10.6 billion, 99.4% higher on a corporate law basis and a 2.3% improvement when pro-forma comparative criteria are employed, an indication of the gradual improvement expected in BRF’s principal markets.

Cost of Sales – Cost of sales increased 91.5% when compared on a corporate law basis, a reflection of the consolidation of Sadia. This increase was proportionally less than that registered for sales revenue, thus translating into a gain in margin.

On a pro-forma basis, the cost of sales was 75.6% of net sales as opposed to 78.5% in 2009 - R$ 4.2 billion, representing a decline of 1.0%, and driven by the reduction in the costs of the principal raw materials and direct materials as well as a recovery in

Page: 1 55

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

production volumes this year, contributing to an improvement in fixed costs.

This improved business environment was instrumental in reducing sales costs from 80.4% to 76.6% - a 380 basis point accumulated gain in the first half (pro-forma), representing a 2.5% decline in relation to the same period in 2009.

Gross Profit and Gross Margin – Gross Profit totaled R$ 1.4 billion, 159.8% higher on a CL basis and 19.1% better in pro-forma terms. This reflected in a gross margin gain of 290 basis points from 21.5% to 24.4% of net sales. Notably significant in this context was a reduction in production costs during the period. In the first half of 2010 , Gross Profit amounted to R$ 2.5 billion – 151.9% better on a CL basis and 22.2% higher when pro-forma criteria are used.

Operating Expenses – Operating expenses, excluding other operating results and equity accounting, were up by 93.7% according to corporate legislation criteria, and again having a positive impact in pro-forma terms with an improvement of 180 basis points – principally, the result of a reduction in selling expenses as a percentage of net sales from 17.6% to 15.6% - a function of the normalization of industrial activity.

On the other hand, administrative expenses registered a nominal rise of R$ 16.6 million – a 22.4% increase (pro-forma basis) due to disbursements to consultancies hired for conducting appraisals and in view of the merger. Management compensation reported a significant drop, 2009 being a year when labor contracts with certain executives were terminated, principally due to retirement.

Total operating expenses were R$ 1.8 billion in the first half, 92.3% higher in CL terms while on a pro-forma comparative basis these were 8.2% down and representing a gain of 190 basis points despite initial expenses with the integration project.

Operating Income and Margin – The Company reported operating income before financial expenses (EBIT) of R$ 398.3 million, excluding other operating results and equity accounting, recording a pro-forma operating margin of 7.2% against 2.5% in the second quarter of 2009, a reflection of stronger business performance. This significant gain of 202.3% in operating income is equivalent to 470 basis points, or an additional R$ 266.6 million generated in the quarter. First half results were R$ 611.1 million, a growth of 1,082.3%, with operating margins improving from 0.5% to 6.3%.

Financial Results – Net financial expenses were R$ 148.4 million against net financial income of R$ 167.6 million in 2Q09. In addition to loan interest payments and exchange rate variation on financial assets and liabilities, in 2009, the Company reported income due to the currency impact on its net exposure. On a pro-forma basis, financial expenses totaled R$ 148.4 million against R$ 778.3 million in financial income recorded last year – principally due to the effects of currency exposure.

Page: 1 56

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Net debt as of June 30 2010 was R$ 4.3 billion, a 54% reduction in relation to June 30 2009 on a pro-forma comparative basis. Funds raised from a primary share offering of R$ 5.3 billion enabled the wholly owned Sadia subsidiary to significantly reduce its short term debt.

The net debt/EBITDA ratio was 2.4 times due to lower cash generation during the preceding year, although the level of net debt is deemed compatible and sufficient for the Company’s operations. Consolidated currency exposure was US$ 154.4 million - within BRF’s parameters for hedge accounting.

Debt Profile – Pro-forma

R$ Million 06.30.2010 Pro forma — 06.30.2009
DEBT - R$ MILLION CURRENT NONCURRENT TOTAL TOTAL % Ch.
Local Currency 1,584 1,902 3,486 4,512 (23%)
Foreing Currency 595 3,917 4,511 8,129 (45%)
Gross Debt 2,178 5,819 7,997 12,641 (37%)
Cash Investments
Local Currency 1,426 280 1,705 2,261 (25%)
Foreing Currency 1,805 288 2,093 1,124 86%
Total Cash Investments 3,231 568 3,798 3,385 12%
Net Accounting Debt (1,052) 5,251 4,199 9,256 (55%)
Exchange Rate Exposure - US$ Million (155) (522) (70%)

Other Operating Results – relates largely to the costs of idle capacity – the result of new plants still at a pre-operational stage in: Bom Conselho-PE, Lucas do Rio Verde-MT, Vitória de Santo Antão-PE, Mineiros-GO and Três de Maio-RS.

Income Tax and Social Contribution – Quarterly income tax and social contribution totaled R$ 33.1 million against R$ 42 million for the previous year in corporate law terms and R$ 416.8 million on a pro-forma basis due to the negative results reported at Sadia in the preceding year.

Net Income and Net Margin – BRF posted net earnings of R$ 171.5 million in the quarter, representing a net margin of 3.1%, a growth of 24.4% in 2Q10 against 2Q09 according to the CL and net income of R$ 480.4 million in 2Q09 on a pro-forma basis, reflecting financial income reported during the period. Net income for the quarter reflect operating cash generation from improved commercial performance, principally due to domestic market business and the recovery in exports.

EBITDA – In line with our expectations for a consistent and gradual improvement in

Page: 1 57

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

results, the Company reported additional operating cash generation as recorded in EBITDA (operating income before financial expenses, taxes and depreciation) of R$ 240 million and recording total EBITDA in 2Q10 of R$ 614.3 million. This was equivalent to a margin of 11.1% and a 400 basis points gain in relation to 2Q09 (pro-forma). Principal factors contributing to this increase were: the larger volume of processed products sold in the domestic market, a gradual recovery seen in some important export markets, and the reduction in production costs and commercial expenses. EBITDA growth was R$ 351% according to CL criteria.

Breakdown of Ebitda - CL

EBITDA - R$ Million 2Q10 2Q09 % Ch. 1H10 1H09 % Ch.
Net Income 171 138 24 233 (84) -
Non Controlling Shareholders (1) 0 - (1) 0 -
Income Tax and Social Contribution 33 42 (21) 31 152 (80)
Net Financial 148 (168) - 300 (67) -
Equity Accounting and Other Operating Result 48 17 175 101 33 209
Depreciation, Amortization and Depletion 215 106 102 394 218 81
= EBITDA 614 136 351 1,058 252 320

Shareholders’ Equity – Shareholders’ equity as at June 30 2010 stood at R$ 13.2 billion against R$ 3.8 billion on June 30 2009, a 243% increase thanks to the primary share offering and the increases in capital via incorporation of shares of Sadia’s shareholders, these operations being concluded in the second half of 2009.

Combination of the Businesses – The accounting and fiscal treatment with respect to the association agreement were measured in accordance with current practices, allocations being made to property, plant and equipment or non-current assets, under the “intangible” item to be subject to annual appraisals using the impairment test (non-recoverability).

Shareholder Remuneration – A meeting of the Board of Directors held on June 17 2010 approved shareholder remuneration of R$ 0.061136430 per share to be paid out on August 27 2010 as interest on shareholders’ equity. Income tax will be withheld at source pursuant to the prevailing legislation.

Stock Market

Stock Split – The Extraordinary and Ordinary General Meeting of March 31 2010 approved a 100% split of the Company’s shares in the proportion of one new share for each existing share as well as a change in the ratio of the Company’s ADR (American

Page: 1 58

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Depositary Receipts) program such that the latter securities will have the same proportional share base, 1 (one) share corresponding to 1 (one) ADR.

Performance

2Q10 2Q09 1H10 1H09
●
Share price - R$* 23.70 18.75 23.70 18.75
Traded Shares (Volume) - Millions 155.6 126.9 304.0 199.5
Performance (1.0%) 30.4% 4.5% 26.1%
Bovespa Index (13.4%) 25.8% (11.2%) 37.1%
IGC (Brazil Corp. Gov. Index) (9.4%) 27.5% (7.3%) 33.7%
ISE (Corp. Sustainability Index) (6.8%) 22.3% (6.2%) 22.6%
Share price - US$* 13.26 9.55 13.26 9.55
Traded Shares (Volume) - Millions 74.9 49.3 139.9 90.3
Performance (3.5%) 53.9% 1.3% 44.7%
Dow Jones Index (10.0%) 11.0% (6.3%) (3.8%)
* Closing Price

The average daily financial trading volume on the BMF&Bovespa and the NYSE – New York Stock Exchange amounted to US$ 48.2 million in the quarter, a 94.4% increase, and US$ 47.1 million during the year, equivalent to an increase of 152.2%. The Company’s shares and ADRs outperformed the principal capital markets’ stock indices.

Page: 1 59

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Social Balance

BRF employs more than one hundred thousand at the production and commercial units and in the corporate divisions. The Company runs SSMA (Health, Safety and Environmental) management and professional development programs designed to provide appropriate and safe working conditions for its employees. In addition, BRF pursues an ongoing process of providing a better quality of life and runs various social outreach programs for the communities in which its operations are located.

Stock Option Plan – The Ordinary and Extraordinary General Meeting (O/EGM) of March

Page: 1 60

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

31 2010 approved the Compensation Plan based on Shares and the Regulations for the options granted to executives of BRF – Brasil Foods S.A. On June 17 20 10, the Board authorized the amount of 1,540,011 (one million, five hundred and forty thousand and eleven) stock options, granted to 34 executives with a maximum exercise tenor of five years as established under the Regulations of the Compensation Plan based on shares approved by the O/EGM held on March 31 1010.

Added Value (CL)

Added Value Distribution 1H10 1H09
Human Resources 1,518 695
Taxes 1,582 866
Interest/Rents 1,010 876
Interest on shareholder's equity 53 0
Retention 179 (84)
Non-controlling shareholders (1) 0
Total 4,340 2,353

Corporate Governance

Corporate Structure – The new structure of the Board of Executive Officers already established and to become effective following CADE’s approval of the merger proposal, will comprise one Chief Executive Officer and 10 Executive Vice Presidents, being: Export Market; Food Service; Human Resources; Domestic Market; Finance, Administration and Investor Relations; Strategies and M&A; Operations and Technology; Dairy Products Operations; Corporate Affairs and Supply Chain .

Page: 1 61

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Diffused Control – Equal Rights

As of July31 2010

Capital Stock – R$ 12.6 billion Number of Shares – 872,473,246

Rating – BRF has been assigned two corporate credit ratings: a BB+ (PE) rating from Standard & Poor´s and a Ba1 – (PE) rating - Global Local Currency Corporate Family from Moody´s Investor Service .

Novo Mercado (New Market) - BRF signed up to the BM&FBovespa’s Novo Mercado on April 12 2006 binding it to settle disputes through the Arbitration Panel according to the arbitration clause written into its bylaws and regulations

Risk Management - BRF and its subsidiaries adopts the most rigorous management practices for controlling and minimizing the impact of the risks inherent to its businesses, details of which are shown in explanatory note 4 of the Financial Statements. Risks involving the markets in which the Company operates, sanitary controls, grains, nutritional safety and environmental protection, as well as internal controls and financial risks are all monitored.

Independent Audit – No disbursements of consultancy fees were made to the independent auditors during the period. The engagement of these services requires prior Board approval and adheres to the rules and restrictions established by the legislation, conditional on this not undermining the independence and objectivity of our auditors. The Company’s financial information shown herein is in accordance with accounting practices adopted in Brazil and is an integral part of the audited financial statements. Non-financial information as well as other operating information has not been subject to

Page: 1 62

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

revision on the part of our independent auditors.

Pursuant to CVM Instruction 480/09 at a meeting on August 12 2010, the Board of Executive Officers states it has discussed, reviewed and agreed both the opinions expressed in the report of the independent auditors and also the financial statements for the quarter ending on June 30 2010.

CADE - The Association Agreement has been submitted for the examination of the Brazilian anti-trust authorities (the Administrative Council for Economic Defense – CADE). During the period in which the Brazilian anti-trust authorities are examining the Association, BRF and Sadia may be subject to certain specific commitments agreed with these authorities and designed to maintain the status quo in market conditions.

On June 30, the Finance Ministry’s Economic Monitoring Secretariat (SEAE) published its report on the proposed corporate merger. SEAE has recommended to CADE that the operation be approved with restrictions. BRF has underscored its conviction that there are sufficient technical arguments to be made to CADE as to the operation’s pro-competitive nature and the fact that it will reinforce Brazil’s penetration and competitiveness in export market. BRF remains confident that CADE will fully approve the operation in view of the absence of any significant entry barriers as well as the existence of intense market rivalry and the capture of major synergies and efficiencies.

As agreed with the authorities we have initially undertaken the integration of the financial area and the respective policies covering risks associated with the in-natura export and domestic market businesses as well as the acquisition of certain raw materials and services. The integration plan and identification of synergies project have been successfully concluded for implementation once CADE has announced its decision.

Page: 1 63

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Awards/Recognition Reason Institution
Best Company - 2010 The Best of Dinheiro – Best in Corporate Governance,
Financial Sustainability and Social Istoé Dinheiro Magazine
Responsibility
Best Annual Sustainability Report Debut Corporate Register Reporting Awards (CRRA)
First Runner-Up
Top 5 Best Corporate Governance, Annual IR Magazine Awards
Report and IR Professional
Most Innovative - For the micro-oven Hot Pocket pizza – World Packaging Organization
Worldwide Sadia Brand – Packaging category
Best Executive in the Food Sector awarded to the Company’s CEO
Executive of Valor Valor Econômico newspaper

Page: 1 64

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Attachment I

BRF - Brasil Foods S.A. PUBLIC COMPANY

CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED (R$ Million)

BALANCE SHEET - Corporate Law 06.30.2010 06.30.2009
ASSETS 27,395 10,401
CURRENT ASSETS 9,725 5,084
NONCURRENT ASSETS 17,670 5,317
Long Term Assets 4,526 930
Investments 14 1
Property, Plant and Equipment 8,882 2,844
Intangible 4,247 1,542
LIABILITIES AND SHAREHOLDERS' EQUITY 27,395 10,401
CURRENT LIABILITIES 5,151 3,056
LONG TERM LIABILITIES 9,072 3,505
NON CONTROLLING SHAREHOLDERS 13,171 3,840
SHAREHOLDERS' EQUITY 12,460 3,445
Capital Stock Restated 821 435
Interest on shareholders' equity (53) -
Other comprehensive income (34) (40)
Treasury Shares (26) (1)
Non Controlling Shareholders 3 1
INCOME STATEMENT - Corporate Law 2Q10 2Q09 % Ch. 1H10 1H09 % Ch.
NET SALES 5,532 2,703 105% 10,579 5,306 99%
Domestic Sales 3,157 1,523 107% 6,142 3,010 104%
Exports 2,374 1,180 101% 4,437 2,296 93%
Cost of Sales (4,181) (2,183) 92% (8,104) (4,324) 87%
GROSS PROFIT 1,350 520 160% 2,475 982 152%
Operating Expenses (952) (492) 94% (1,807) (940) 92.3%
OPERATING INCOME BEFORE FINANCIAL EXPENSES 398 28 1314% 668 42 1480%
Financial Expenses, Net (148) 168 - (300) 67 -
Other Operating Results/Equity Accounting (46) (16) 194% (105) (41) 157%
INCOME BEFORE FINANCIAL EXP. AND OTHER RESULTS 203 180 13% 262 69 282%
Income Tax and Social Contribution (33) (42) (21%) (31) (20) 51%
Non-controlling shareholders 1 (0) - 1 (0) -
NET INCOME 171 138 24% 233 (84) -
ADJUSTED NET INCOME* 171 138 24% 233 48 384%
EBITDA 614 136 351% 1,058 250 323%
*Adjusted Net Income - Excluding the absorption of the tax loss relative to the incorporation of Perdigão Agroindustrial S.A. booked to first quarter results 2009, in the amount of R$132 million

Page: 1 65

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Attachment II

INCOME STATEMENT - R$ MILLION 2Q10 Pro forma % Ch. 1H10 Pro forma % Ch.
2Q09 1H09
Net Sales 5,532 5,276 5 10,579 10,337 2
Domestic Market 3,157 2,935 8 6,142 5,787 6
Exports 2,374 2,341 1 4,437 4,550 (2)
Cost of Sales (4,181) (4,142) 1 (8,104) (8,312) (2.5)
Gross Profit 1,350 1,134 19 2,475 2,025 22
Operating Expenses (952) (1,002) (5) (1,807) (1,969) (8.2)
Income Before Financial Results (EBIT) 398 132 202 668 56 1,082
Financial Expenses, Net (148) 778.3 - (300) 422 -
Other Operating Results/Equity Accounting (46) (16) 186 (105) (16) 537
Income after Financial Expenses and Other 203 894 (77) 262 462 (43)
Income Tax and Social Contribution (33) (416.8) (92) (31) (320) (90)
Non Controlling Shareholders 1 3 (68) 1 8 (86)
Net Income 171 480 (64) 233 18 1,171
Net Margin 3.1% 9.1% (600 bps) 2.2% 0.2% 200 bps
Adjusted Net Income* 171 480 (64) 233 150 55
Adjusted Net Margin 3.1% 9.1% (600 bps) 2.2% 1.5% 70 bps
EBITDA 614 374 64 1,058 547 94
EBITDA Margin 11.1% 7.1% 400 bps 10.0% 5.3% 470 bps
*Adjusted Net Income - Excluding the absorption of the tax loss relative to the incorporation of Perdigão Agroindustrial S.A. booked to first quarter results 2009, in the amount of R$132 million

Page: 1 66

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Attachment III

Domestic Market THOUSAND TONS — 2Q10 Pro forma % Ch. 2Q10 R$ MILLION — Pro forma % Ch.
2Q09 2Q09
Meats 431 401 7 1,928 1,816 6
In Natura 91 79 16 424 310 37
Poultry 54 51 5 209 183 14
Pork/Beef 37 27 36 215 127 70
Elaborated/Processed (meats) 340 322 5 1,505 1,506 (0)
Dairy Products 273 233 17 569 552 3
Milk 226 181 25 412 379 9
Dairy Products 46 52 (10) 157 173 (9)
Other Processed 116 105 11 518 433 20
Soybean Products/ Others 98 94 4 142 134 6
Total 917 832 10 3,157 2,935 8
Processed 502 478 5 2,180 2,112 3
% Total Sales 55 57 69 72
Exports THOUSAND TONS — 2Q10 Pro forma % Ch. 2Q10 R$ MILLION — Pro forma % Ch.
2Q09 2Q09
Meats 613 556 10 2,353 2,301 2
In Natura 525 476 10 1,955 1,872 4
Poultry 452 398 14 1,557 1,478 5
Pork/Beef 73 78 (6) 398 394 1
Elaborated/Processed (meats) 87 80 9 398 429 (7)
Dairy Products 1 1 (19) 6 7 (12)
Milk 0 1 (96) 0 5 (97)
Dairy Products 1 0 122 6 2 185
Other Processed 3 4 (26) 15 33 (54)
Total 616 561 10 2,374 2,341 1
Processed 91 85 8 419 464 (10)
% Total Sales 15 15 18 20
TOTAL THOUSAND TONS — 2Q10 Pro forma % Ch. 2Q10 R$ MILLION — Pro forma % Ch.
2Q09 2Q09
Meats 1,043 957 9 4,282 4,117 4
In Natura 617 554 11 2,379 2,182 9
Poultry 506 449 13 1,766 1,662 6
Pork/Beef 111 105 5 613 520 18
Elaborated/Processed (meats) 427 402 6 1,903 1,935 (2)
Dairy Products 273 234 17 575 559 3
Milk 226 182 24 412 384 7
Dairy Products 47 52 (9) 163 175 (7)
Other Processed 119 109 9 533 466 14
Soybean Products/ Others 98 94 4 142 134 6
Total 1,534 1,393 10 5,532 5,276 5
Processed 593 563 5 2,599 2,576 1
% Total Sales 39 40 47 49

Page: 1 67

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A. 01.838.723/0001-27*

12.01 – COMMENTS ON THE CONSOLIDATED PERFORMANCE IN THE QUARTER

Attachment IV

Domestic Market THOUSAND TONS — 1H10 Pro forma % Ch. 1H10 R$ MILLION — Pro forma % Ch.
1H09 1H09
Meats 843 802 5 3,778 3,597 5
In Natura 174 165 5 786 625 26
Poultry 103 112 (8) 394 386 2
Pork/Beef 71 53 32 392 239 64
Elaborated/Processed (meats) 669 637 5 2,992 2,972 1
Dairy Products 530 484 10 1,110 1,054 5
Milk 433 382 13 782 710 10
Dairy Products 97 102 (4) 328 343 (5)
Other Processed 223 202 11 984 827 19
Soybean Products/ Others 190 298 (36) 270 310 (13)
Total 1,786 1,786 0 6,142 5,787 6
Processed 990 941 5 4,304 4,143 4
% Total Sales 55 53 70 72
Exports THOUSAND TONS — 1H10 Pro forma % Ch. 1H10 R$ MILLION — Pro forma % Ch.
1H09 1H09
Meats 1,139 1,085 5 4,396 4,455 (1)
In Natura 968 920 5 3,600 3,578 1
Poultry 828 776 7 2,862 2,837 1
Pork/Beef 140 144 (3) 738 741 (0)
Elaborated/Processed (meats) 171 165 4 796 877 (9)
Dairy Products 2 2 (25) 11 13 (17)
Milk 0 2 (89) 1 9 (90)
Dairy Products 2 1 102 10 4 144
Other Processed 4 8 (52) 30 81 (63)
Total 1,145 1,096 5 4,437 4,550 (2)
Processed 176 174 1 836 962 (13)
% Total Sales 15 16 19 21
Total THOUSAND TONS — 1H10 Pro forma % Ch. 1H10 R$ MILLION — Pro forma % Ch.
1H09 1H09
Meats 1,982 1,887 5 8,174 8,052 2
In Natura 1,142 1,085 5 4,386 4,203 4
Poultry 932 888 5 3,256 3,223 1
Pork/Beef 211 198 7 1,130 979 15
Elaborated/Processed (meats) 840 802 5 3,789 3,849 (2)
Dairy Products 532 486 9 1,121 1,067 5
Milk 433 383 13 783 719 9
Dairy Products 99 103 (4) 338 348 (3)
Other Processed 227 210 8 1,013 908 12
Soybean Products/ Others 190 298 (36) 270 310 (13)
Total 2,931 2,881 2 10,579 10,337 2
Processed 1,166 1,115 5 5,140 5,105 1
% Total Sales 40 39 49 49

All forward-looking statements contained in this report regarding the Company’s business prospects, projected results and the potential growth of its businesses are mere forecasts based on local management expectations in relation to the Company’s future performance. Dependent as they are on market shifts and on overall performance of the Brazilian economy and the sector and international markets, such estimates are subject to change. The merger between BRF and Sadia is currently the subject of examination by the Brazilian Anti-Trust Authorities and its implementation depends on the approval of CADE. On July7 2009 an agreement was signed with ADE (APRO - Transaction Reversibility Preservation Agreement) which guarantees the reversibility of the operation, authorizes the preparation of studies of synergies and the adoption of joint management initiatives with respect to treasury activity.

Page: 1 68

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A.* 01.838.723/0001-27****

09.01 – INTERESTS IN SUBSIDIARIES AND/OR AFFILIATES

1 - Item 3 - General Tax payers’ Register
7 - TYPE OF COMPANY 8 - number of shares held on current quarter ( Units) 9 - number of shares held on last quarter ( Units)
01 04.688.823/0001-02
COMMERCIAL, INDUSTRIAL AND OTHERS 100,000 100,000
02 08.519.312/0001-18
COMMERCIAL, INDUSTRIAL AND OTHERS 10 10
03 08.747.353/0001-61
COMMERCIAL, INDUSTRIAL AND OTHERS 10 10
04 08.432.089/0001-77
COMMERCIAL, INDUSTRIAL AND OTHERS 500 500
05 20.730.099/0001-94
COMMERCIAL, INDUSTRIAL AND OTHERS 683,000,000 456,604,595
06 91.399.972/0001-56
COMMERCIAL, INDUSTRIAL AND OTHERS 10,177,028 10,177,028
07 05.449.127/0001-06
COMMERCIAL, INDUSTRIAL AND OTHERS 7,465,073 7,465,073
08 91.399.956/0001-63
COMMERCIAL, INDUSTRIAL AND OTHERS 445,362 445,362

Page: 1 69

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A.* 01.838.723/0001-27****

09.01 – INTERESTS IN SUBSIDIARIES AND/OR AFFILIATES

09 — COMMERCIAL, INDUSTRIAL AND OTHERS 1,800,000 1,800,000
10 — COMMERCIAL, INDUSTRIAL AND OTHERS 35,000 35,000
11 — COMMERCIAL, INDUSTRIAL AND OTHERS 10,000 10,000

Page: 1 70

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A.* 01.838.723/0001-27****

20.01 – OTHER RELEVANT INFORMATION

1) Shareholders’ composition of main shareholders, management and fiscal council as of June 30, 2010 – UNAUDITED:

Shareholders Common shares %
Main shareholders (*)
Shareholders’ that take part of voting agreement 246,818,524 28.29
Management:
Board of directors 14,562,782 1.67
Executive officers 646 -
Treasury shares 2,288,382 0.26
Other shareholders 608,802,912 69.78
872,473,246 100.00
Shares outstanding 608,802,912 69.78

2) Shareholders’ composition of main shareholders, management and fiscal council as of June 30, 2009 – UNAUDITED :

Shareholders Common shares %
Main shareholders (*) 72,461,290 35.01
Management:
Board of directors/executive officers 334,605 0.16
Fiscal Council - -
Treasury shares 430,485 0.21
Other shareholders 133,731,723 64.62
206,958,103 100.00
Shares outstanding 133,731,723 64.62

(*) Shareholders that take part of voting agreement.

Page: 1 71

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A.* 01.838.723/0001-27****

20.01 – OTHER RELEVANT INFORMATION

3) The position of the controlling shareholders who are part of the shareholders’ vote agreement and/or are holders of more than 5% of the voting capital as of June 30, 2010, is as follows:

Shareholders Common shares %
Caixa de Prev. Func. Bco Brasil (1) 114,212,042 13.09
Fundação Petrobrás de Seguridade Social - PETROS (1) 85,733,026 9.83
Fundação Sistel de Seguridade Social (1) 13,286,082 1.52
Fundação Vale do Rio Doce – VALIA (1) 25,998,170 2.98
FPRV1 Sabiá FIM Previdenciário (2) 7,589,204 0.87
246,818,524 28.29
Other 625,654,722 71.71
872,473,246 100.00

(1) The Pension Funds are controlled by participating employees of the respective companies.

(2) Investment fund exclusively held by the by Fundação de Assistência and Previdência Social do BNDES – FAPES. The common shares currently held by the fund are bound by the voting agreement .

As of June 30, 2010 there were 608,802,912 free floating common shares outstanding 69.78% of the total of issued shares.

The Company is bound to arbitration in the Market Arbitration Chamber, as established by the arbitration clause in the by-laws.

Page: 1 72

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A.* 01.838.723/0001-27****

*21.01 – INDEPENDENT AUDITOR’S REVIEW REPORT - UNQUALIFIED*

Independent auditors’ review report

To the Board of Directors and Shareholders

BRF - Brasil Foods S.A.

Itajaí - SC

  1. We have reviewed the Quarterly Financial Information of BRF - Brasil Foods S.A. (the Company), comprising the balance sheet and the statements of income, comprehensive income, changes in shareholders’ equity and cash flows and the consolidated Quarterly Financial Information of the Company and its subsidiaries comprising the consolidated balance sheet and the consolidated statements of income, comprehensive income, changes in shareholders’ equity and cash flows, both referring to the quarter ended June 30, 2010, of which include the explanatory notes and management’s report, which are the responsibility of its management.

  2. Our review was conducted in accordance with the specific rules set forth by the IBRACON - The Brazilian Institute of Independent Auditors, in conjunction with the Federal Accounting Council - CFC and consisted mainly of the following: (a) inquiry and discussion with management responsible for the accounting, financial and operational areas of the Company and its subsidiaries, regarding the main criteria adopted in the preparation of the Quarterly Financial Information; and (b) reviewing information and subsequent events that have or may have relevant effects on the financial position and operations of the Company and its subsidiaries.

  3. Based on our review, we are not aware of any material modifications that should be made in the accounting information included in the Quarterly Financial Information described above, for these to be in accordance with accounting practices adopted in Brazil, especially the Committee for Accounting Pronouncements – CPC n° 21 – Interim Financial Statements and the rules issued by the Brazilian Securities and Exchange Commission (CVM), which are applicable to the preparation of the Quarterly Financial Information.

  4. Based on our review, we are also not aware of any material modifications that should be made in the accounting information included in the consolidated Quarterly Financial Information of the Company and its subsidiaries described

Page: 1 73

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A.* 01.838.723/0001-27****

*21.01 – INDEPENDENT AUDITOR’S REVIEW REPORT - UNQUALIFIED*

above, for these to be in accordance with International Financial Reporting Standards – IFRS, notably IAS 34 – Interim Financial Reporting, issued by the “International Accounting Standards Board – IASB” and rules issued by the CVM, which are applicable to the preparation of the Quarterly Financial Information.

  1. As discussed in note 1, during the years of 2009 and 2010 a number of Pronouncements, Interpretations and Technical Guidance issued by the Committee for Accounting Pronouncements – CPC – were approved by the CVM, in effect as from January 1, 2010, and changed certain accounting practices adopted in Brazil. These changes were adopted by the Company and its subsidiaries in the preparation of the Quarterly Financial Information for the quarter ended June 30, 2010 and disclosed in note 1. The Quarterly Financial Information is being resubmitted and therefore, differs from the financial information originally presented by the Company on August 13, 2010. The Quarterly Financial Information for the year and period related to 2009 and 2010, presented herein for comparison purposes, were adjusted to include the changes in the accounting practices adopted in Brazil in effect in 2010.

  2. As discussed in note 1, the Company and its subsidiaries began presenting consolidated Quarterly Financial Information since 2010, in accordance with IFRS, notably IAS 34. The consolidated Quarterly Financial Information of the Company and its subsidiaries for the year and period related to 2009, prepared in accordance with IFRS, are being presented for comparative purposes.

  3. Our review was conducted with the objective of issuing a review report about the financial information contained in the Quarterly Financial Information of the Company and its subsidiaries as referred to in the first paragraph, taken as a whole. The statements of value added (DVA), prepared under management’s responsibility, are presented for the purpose of additional analysis and are not a required by IFRS as issued by the IASB. This supplemental information has been subjected to the same review procedures applied in the review of the Quarterly Financial Information of the Company and its subsidiaries and, based on our review, we are not aware of any material modification that should be done so that the complementary information is fairly presented in all material respects in relation to the Quarterly Financial Information referred to in the first paragraph, taken as whole.

Page: 1 74

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A.* 01.838.723/0001-27****

*21.01 – INDEPENDENT AUDITOR’S REVIEW REPORT - UNQUALIFIED*

  1. As discussed in note 7, on July 8, 2009, the Company acquired Sadia S.A. This transaction is under analysis of the Administrative Counsel for Economic Defense (“CADE”) and involved the execution of an Agreement for the Preservation of the Operation Reversibility (“APRO”), until the implementation of the final decision by CADE.

São Paulo, May 11, 2011

KPMG Auditores Independentes

CRC SC-000071/F-8

Danilo Siman Simões

Accountant CRC MG-058180/O-2 S-SC

Page: 1 75

FEDERAL PUBLIC DEPARTMENT

BRAZILIAN SECURITIES COMMISSION – CVM

ITR – Quarterly Information June 30, 2010 *CORPORATE LAW*

COMMERCIAL, INDUSTRIAL COMPANY AND OTHERS

*01629-2 – BRF-BRASIL FOODS S.A.* 01.838.723/0001-27****

*23.01 – DESCRIPTION OF MODIFIED INFORMATION*

Adoption of IFRS - see note 1

Page: 1 76

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 17 , 2011

By:
Name: Leopoldo Viriato Saboya
Title: Financial and Investor Relations Director

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